Discouraging Pool Block Withholding Attacks in Bitcoins

TL;DR

This paper proposes a game-theoretic model to discourage pool block withholding attacks in Bitcoin mining pools, showing that the new reward allocation incentivizes honest behavior and makes no-attacks a stable equilibrium.

Contribution

It introduces a revised reward allocation model that incentivizes honest mining behavior and guarantees no-attacks as a Nash equilibrium in Bitcoin mining pools.

Findings

No-pool-attacks is always a Nash equilibrium.

With two minority pools, no-pool-attacks is the unique Nash equilibrium.

The new model incentivizes honest mining behavior.

Abstract

The arisen of Bitcoin has led to much enthusiasm for blockchain research and block mining, and the extensive existence of mining pools helps its participants (i.e., miners) gain reward more frequently. Recently, the mining pools are proved to be vulnerable for several possible attacks, and pool block withholding attack is one of them: one strategic pool manager sends some of her miners to other pools and these miners pretend to work on the puzzles but actually do nothing. And these miners still get reward since the pool manager can not recognize these malicious miners. In this work, we revisit the game-theoretic model for pool block withholding attacks and propose a revised approach to reallocate the reward to the miners. Fortunately, in the new model, the pool managers have strong incentive to not launch such attacks. We show that for any number of mining pools, no-pool-attacks is always a Nash equilibrium. Moreover, with only two minority mining pools participating, no-pool-attacks is actually the unique Nash equilibrium.