Inertial Mining: Equilibrium Implementation of the Bitcoin Protocol

TL;DR

This paper introduces inertial mining, a new protocol ensuring miners' incentives align with honest behavior, making the Bitcoin protocol an equilibrium without altering its core architecture.

Contribution

The paper proposes inertial mining, a novel protocol that guarantees equilibrium in Bitcoin mining and prevents profitable deviations like selfish mining.

Findings

Inertial mining makes Bitcoin's protocol an equilibrium under no majority control.

It prevents profitable deviations such as selfish mining.

Can be implemented without changes to Bitcoin's existing architecture.

Abstract

The value of proof-of-work cryptocurrencies critically depends on miners having incentives to follow the protocol. However, the Bitcoin mining protocol proposed by Nakamoto (2008) and implemented in practice is well known not to constitute an equilibrium: Eyal and Sirer (2018) construct a profitable deviation called ``selfish mining'' which relies on strategically delaying disclosure of newly mined blocks rather than publishing them immediately. We propose inertial mining, a novel mining protocol. When miners follow inertial mining, they produce the outcome intended by Nakamoto, i.e., a single longest chain. But unlike the Bitcoin mining protocol, inertial mining constitutes an equilibrium (assuming no miner controls more than half of the mining power). Indeed, neither selfish mining nor any other deviation is profitable. Furthermore, inertial mining only changes miners' behavior in the event of off-path forks, and can be implemented in Bitcoin without any changes to its consensus mechanism or blockchain architecture.