On profitability of selfish mining and a method to prevent it

Selfish mining is a phenomenon where miners lower the difficulty setting of a network to reduce the amount of effort they put in but obtain the same reward as honest miners.

There have been many proposals to discourage this but it seems not to be working. This time, a pair of researchers Cyril Grunspan and Ricardo Pérez-Marco are proposing a method they are convinced will help to deter miners from selfish mining.

In an interview accorded to BitcoinMagazine, the researchers explained the method, which works by allowing peers to peers to broadcast headers of new orphan blocks which are invalidated by selfish miners to reduce difficulty. Miners incorporate the broadcast headers into their blocks and a difficulty adjustment formula, created by the researchers, will then integrate the overall production of orphan blocks.

The idea works by eliminating difficulty adjustment, which makes selfish mining wasteful and unfruitful rather than profitable, discouraging any attempts.

Abstract from the paper:

We review the so called selfish mining strategy in the Bitcoin network and compare its profitability to honest mining. We build a rigorous profitability model for repetition games. The time analysis of the attack has been ignored in the previous literature based on a Markov model, but is critical. Using martingale’s techniques and Doob Stopping Time Theorem we compute the expected duration of attack cycles. We discover a remarkable property of the bitcoin network: no strategy is more profitable than the honest strategy before a difficulty adjustment. So selfish mining can only become profitable afterwards, thus it is an attack on the difficulty adjustment algorithm. We propose an improvement of Bitcoin protocol making it immune to selfish mining attacks. We also study miner’s attraction to selfish mining pools. We calculate the expected duration time before profit for the selfish miner, a computation that is out of reach by the previous Markov models.

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