Leveraging the Verifier's Dilemma to Double Spend in Bitcoin

TL;DR

This paper introduces a novel mining attack strategy called the dual private chain (DPC) attack, which exploits the verifier's dilemma to increase double spending success in Bitcoin, thereby reducing its security.

Contribution

It presents the perishing mining strategy and the DPC attack, analyzing their effectiveness and impact on Bitcoin's security through simulations.

Findings

DPC attack increases double spending success rate.

DPC attack lowers Bitcoin's security threshold.

Perishing mining influences miners to withhold useful work.

Abstract

We describe and analyze perishing mining, a novel block-withholding mining strategy that lures profit-driven miners away from doing useful work on the public chain by releasing block headers from a privately maintained chain. We then introduce the dual private chain (DPC) attack, where an adversary that aims at double spending increases its success rate by intermittently dedicating part of its hash power to perishing mining. We detail the DPC attack's Markov decision process, evaluate its double spending success rate using Monte Carlo simulations. We show that the DPC attack lowers Bitcoin's security bound in the presence of profit-driven miners that do not wait to validate the transactions of a block before mining on it.