Cryptology ePrint Archive: Report 2017/230

Smart Contracts Make Bitcoin Mining Pools Vulnerable

Yaron Velner and Jason Teutsch and Loi Luu

Abstract: Despite their incentive structure flaws, mining pools account for more than 95% of Bitcoin's computation power. This paper introduces an attack against mining pools in which a malicious party pays pool members to withhold their solutions from their pool operator. We show that an adversary with a tiny amount of computing power and capital can execute this attack. Smart contracts enforce the malicious party's payments, and therefore miners need neither trust the attacker's intentions nor his ability to pay. Assuming pool members are rational, an adversary with a single mining ASIC can, in theory, destroy all big mining pools without losing any money (and even make some profit).

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Original Publication (in the same form): 4th Workshop on Bitcoin and Blockchain Research

Date: received 7 Mar 2017

Contact author: loiluu at comp nus edu sg

Available format(s): PDF | BibTeX Citation

Version: 20170308:132034 (All versions of this report)

Short URL: ia.cr/2017/230