How does one get to be a mining pool operator? Is there an election by people who want to pool their computing resources? What checks and balances exist to ensure that a pool operator doesn't misappropriate funds?
This question was inspired by my comment, and a response on this question? What prevents miners in a pool from retaining the reward?
You, the miner, are the one being paid by the pool operator for doing some computation. It's a free and open market. You can switch pools if you're unhappy with the reward or the honesty of an operator.
To become a pool operator there's no election process or formal checking whatsoever. Again, it's a game based on reputation. Just like any other business, if an operator misbehaves (by stealing funds or something), they lose reputation and therefore users.
Its totally open to anyone! You can create your own mining pool and get miners based on your reputation. Miners getwork from mining pools and submit their work to the mining pool and get their payouts. There are different types of payouts like PPS, PPLNS and ...
There are new mining pools like P2Pool which is totally a decentralized pool and it doesn't have an operator. You might be interested to check those out.
