Cryptology ePrint Archive: Report 2017/731

Revisiting Difficulty Control for Blockchain Systems

Dmitry Meshkov and Alexander Chepurnoy and Marc Jansen

Abstract: The Bitcoin whitepaper states that security of the system is guaranteed as long as honest miners control more than half of the current total computational power. The whitepaper assumes a static difficulty, thus it is equally hard to solve a cryptographic proof-of-work puzzle for any given moment of the system history. However, the real Bitcoin network is using an adaptive difficulty adjustment mechanism.

In this paper we introduce and analyze a new kind of attack on a mining difficulty retargeting function used in Bitcoin. A malicious miner is increasing his mining profits from the attack, named coin-hopping attack, and, as a side effect, an average delay between blocks is increasing.

We propose an alternative difficulty adjustment algorithm in order to reduce an incentive to perform coin-hopping, and also to improve stability of inter-block delays. Finally, we evaluate the presented approach and show that the novel algorithm performs better than the original algorithm of Bitcoin.

Category / Keywords: applications / proof-of-work, blockchain, difficulty adjustment

Original Publication (with minor differences): International Workshop on Cryptocurrencies and Blockchain Technology - CBT'17

Date: received 28 Jul 2017

Contact author: alex chepurnoy at iohk io

Available format(s): PDF | BibTeX Citation

Version: 20170801:151805 (All versions of this report)

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