The Miner's Dilemma

By Ittay Eyal. IEEE Symposium on Security and Privacy, 2014

433 citations recorded by the source corpus.

An open distributed system can be secured by requiring participants to present proof of work and rewarding them for participation. The Bit coin digital currency introduced this mechanism, which is adopted by almost all contemporary digital currencies and related services. A natural process leads participants of such systems to form pools, where members aggregate their power and share the rewards. Experience with Bit coin shows that the largest pools are often open, allowing anyone to join. It has long been known that a member can sabotage an open pool by seemingly joining it but never sharing its proofs of work. The pool shares its revenue with the attacker, and so each of its participants earns less. We define and analyze a game where pools use some of their participants to infiltrate other pools and perform such an attack. With any number of pools, no-pool-attacks is not a Nash equilibrium. We study the special cases where either two pools or any number of identical pools play the game and the rest of the participants are uninvolved. In both of these cases there exists an equilibrium that constitutes a tragedy of the commons where the participating pools attack one another and earn less than they would have if none had attacked. For two pools, the decision whether or not to attack is the miner's dilemma, an instance of the iterative prisoner's dilemma. The game is played daily by the active Bit coin pools, which apparently choose not to attack. If this balance breaks, the revenue of open pools might diminish, making them unattractive to participants.

Subfields: Artificial Intelligence, Computer Networks and Communications, Information Systems

View Paper: https://www.semanticscholar.org/paper/719e64971f02864cfb9bc52a844c4c921d5e5506

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Citations in the corpus

Bitcoin and Beyond: A Technical Survey on Decentralized Digital Currencies (2016, background): “which infiltrate and sabotage competing mining pools [90], [104].”
Optimal Selfish Mining Strategies in Bitcoin (2015, background): “Additional analysis from a game theoretic perspective has also been conducted with regards to interactions pools, either from a cooperative game theory perspective [12], or when considering attacks between pools [8].”
Hijacking Bitcoin: Routing Attacks on Cryptocurrencies (2016, methodology): “We also quantify their effectiveness on the current Bitcoin topology using data collected from a Bitcoin supernode combined with BGP routing data.”
Zether: Towards Privacy in a Smart Contract World (2020, background): “This property is important in order to protect against the miners’ dilemma [37], where miners are disincentivized to verify blocks if verification becomes too expensive.”
A Survey on Security and Privacy Issues of Bitcoin (2017, background): “Eyal [9] propose a “miner’s dilemma”, again a game theoretical approach to model the behavior of miners similar to repetitive prisoner’s dilemma.”
Decentralized Mining in Centralized Pools (2019, background): “This practice distorts miner incentives and hampers blockchain security.5 Large miners may also be vulnerable to block-withholding attacks against one another, known as miner’s dilemma (Eyal (2015)).”
On the Instability of Bitcoin Without the Block Reward (2016, background): “Some examples include [12] and [8], which analyze how strategic mining pools may attack competing pools in various ways, and [15], which analyzes how strategic Ethereum miners can trick others into wasting their computational”
Cryptocurrencies Without Proof of Work (2014, background): “Thus, an individual miner who has a fraction p of the total mining power can create each new block with probability ≈ p , though other factors such as “selﬁsh mining” [2,10,11,28] can inﬂuence p .”
Demystifying Incentives in the Consensus Computer (2015, background): “For example, in [38, 40], the authors prove that pooled mining protocol is not incentive compatible by showing that miners and pools are susceptible to a block withholding attack.”
A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks (2018, background): “Extended from the studies in [139] and [140], it is found out in [140] that when a mining pool performs a BWH attack to a victim mining pool, the other mining pools will benefit from”
SoK: Research Perspectives and Challenges for Bitcoin and Cryptocurrencies (2015, background): “Eyal [40] provides an extended treatment of this attack and shows that it, between any two pools, the resulting game is an iterated prisoner’s dilemma, with a Nash equilibrium of both pools attacking each other but a Pareto equilibrium of neither attacking.”
A Vademecum on Blockchain Technologies: When, Which, and How (2019, background): “of eventual consistency [6], [234], [257], [258]) since forks may occur.”
SoK: Consensus in the Age of Blockchains (2017, background): “ies on economically incentivising miners to validate and mine blocks, by rewarding them with new coins. However, previous work has shown that Nakamoto consensus is not completely incentive compatible [32, 60, 96]. Aside fromincentives,protocol-levelattacks exist that lower the security threshold of ”
REM: Resource-Efficient Mining for Blockchains (2017, background): “Despite their imperfections [26, 35, 37, 65, 71], blockchains [38, 64, 67] have attracted the interest of the ﬁnancial and technology industries [16, 25, 34, 47, 69, 74] as a way to build a transaction systems with distributed trust.”
Stubborn Mining: Generalizing Selfish Mining and Combining with an Eclipse Attack (2016, background): “Several recent works have examined the game theoretic consequences of attacks and cooperation between pools [8], [16], [14].”