On Subversive Miner Strategies and Block Withholding Attack in Bitcoin Digital Currency

TL;DR

This paper analyzes miner strategies in Bitcoin, focusing on subversive tactics like block withholding attacks, and introduces a new practical attack that enhances rogue miners' gains, highlighting potential risks to Bitcoin's integrity.

Contribution

It presents a detailed study of dishonest mining strategies and proposes a novel, effective block withholding attack to expose vulnerabilities in Bitcoin's security.

Findings

Recent attack execution confirmed in real-world scenarios

Proposed attack maximizes rogue miners' rewards

Highlights risks of dishonest strategies in Bitcoin network

Abstract

Bitcoin is a "crypto currency", a decentralized electronic payment scheme based on cryptography. Bitcoin economy grows at an incredibly fast rate and is now worth some 10 billions of dollars. Bitcoin mining is an activity which consists of creating (minting) the new coins which are later put into circulation. Miners spend electricity on solving cryptographic puzzles and they are also gatekeepers which validate bitcoin transactions of other people. Miners are expected to be honest and have some incentives to behave well. However. In this paper we look at the miner strategies with particular attention paid to subversive and dishonest strategies or those which could put bitcoin and its reputation in danger. We study in details several recent attacks in which dishonest miners obtain a higher reward than their relative contribution to the network. In particular we revisit the concept of block withholding attacks and propose a new concrete and practical block withholding attack which we show to maximize the advantage gained by rogue miners. RECENT EVENTS: it seems that the attack was recently executed, see Section XI-A.