A new research paper argues that bitcoin mining pools can only co-exist peacefully if individual miners regularly switch pools and if pools erect sufficient defenses against attacks.
If pools don’t exhibit either of those properties, then they are liable to attack each other, the report finds.
The paper’s authors, Aron Laszka, Benjamin Johnson and Jens Grossklags, investigated the long-term effects of competition between bitcoin mining pools in a draft version of a study titled, ‘When Bitcoin Mining Pools Run Dry‘.
The final version of the paper will be presented at the Workshop on Bitcoin Research at this year’s Financial Cryptography and Data Security conference in Puerto Rico on 30th January.
The paper uses game theory to look at the impact of attacks between two theoretical mining pools. One pool is deemed more ‘attractive’ than the other, whereby myriad factors like fees, technical structure or public relations savvy find it well-regarded among miners and investors.
How the game works
Pools may spend resources on “productive” or “destructive” investments.
In the former, a pool would add to its overall computing power, trying to beat competitors. A destructive investment, in turn, could come in the form of a distributed denial of service (DDoS) attack on a rival that reduces that entity’s computing power.
The authors devised a game consisting of two players: a bigger mining pool and a smaller pool. In each round of the game, the pools can either attack each other or not. Over time, the size of each pool should be affected by the attacks, as miners choose to “migrate” from one pool to another.
The game was set up to discover two things, according to the paper:
“We study two important questions: the conditions under which the mining pools have no incentives to launch attacks against each other, and the conditions under which one mining pool is annihilated by the attacks.”
Among the findings were signs that pools were capable of cohabitation if individual miners swapped mining pools often and each pool had in place defensive measures that ensured an attack would be too costly for the other side to mount.
Peace can also be achieved between rival pools if either or both pools showed a low level of attractiveness. In practice, the authors write, this means that neither pool would attack the other if they were both busy trying to entice miners to join them.
- ^ Aron Laszka (aronlaszka.com)
- ^ When Bitcoin Mining Pools Run Dry (aronlaszka.com)
- ^ Workshop on Bitcoin Research (fc15.ifca.ai)
- ^ Financial Cryptography and Data Security conference (fc15.ifca.ai)
- ^ game theory (en.wikipedia.org)
- ^ earlier paper (fc14.ifca.ai)
- ^ paper (fc14.ifca.ai)
- ^ White flag image (www.shutterstock.com)
- ^ Academic Research (www.coindesk.com)
- ^ Mining (www.coindesk.com)
- ^ Mining Pools (www.coindesk.com)