Preventing proof-of-work mining attacks

Abstract

Bitcoin mining is the process of generating new blocks in the Bitcoin blockchain. This process is vulnerable to different types of attacks. One of the most famous attacks in this category is selfish mining. This attack is essentially a strategy that a sufficiently powerful mining pool can follow to obtain more revenue than its fair share. The reason that selfish mining is effective is the difficulty adjustment algorithm used in the Bitcoin network. In this paper, we analyze the profitability of selfish mining with respect to time and propose an alternative difficulty adjustment algorithm that discourages selfish mining while allowing the Bitcoin network to remain scalable. We analyze our proposed solution, present the results, and discuss its effectiveness. Based on our analysis, our proposed algorithm effectively increases the profitability waiting time for the attackers to almost double its original value. For example, for a miner with 40% of the network’s hash power, the algorithm extends the waiting time from 4 weeks to more than 11 weeks. This will discourage attackers from performing their malicious activities. We also show that our proposed algorithm allows the network to scale while it increases the waiting time.