Majority is not enough: bitcoin mining is vulnerable

DOI10.1007/978-3-662-45472-5_28MaRDI QIDQ2949240zbMATH OpenOpenAlexFDO

Publication date 8 October 2015

Published in Financial Cryptography and Data Security (Search for Journal in Brave)

Full work available at URL https://arxiv.org/abs/1311.0243

Network protocols (68M12) Applications of game theory (91A80) Cryptography (94A60)

Abstract: The Bitcoin cryptocurrency records its transactions in a public log called the blockchain. Its security rests critically on the distributed protocol that maintains the blockchain, run by participants called miners. Conventional wisdom asserts that the protocol is incentive-compatible and secure against colluding minority groups, i.e., it incentivizes miners to follow the protocol as prescribed. We show that the Bitcoin protocol is not incentive-compatible. We present an attack with which colluding miners obtain a revenue larger than their fair share. This attack can have significant consequences for Bitcoin: Rational miners will prefer to join the selfish miners, and the colluding group will increase in size until it becomes a majority. At this point, the Bitcoin system ceases to be a decentralized currency. Selfish mining is feasible for any group size of colluding miners. We propose a practical modification to the Bitcoin protocol that protects against selfish mining pools that command less than 1/4 of the resources. This threshold is lower than the wrongly assumed 1/2 bound, but better than the current reality where a group of any size can compromise the system.

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