The Miner's Dilemma
This addresses a security and economic stability problem for participants in open cryptocurrency mining pools, but it is incremental as it builds on known sabotage risks.
The paper tackles the security problem of open mining pools in Bitcoin-like systems, where pools can attack each other by infiltration, leading to a tragedy of the commons where all pools earn less; it finds that with two pools, the decision to attack forms a miner's dilemma, and current pools apparently choose not to attack, but if this balance breaks, open pools could become unattractive.
An open distributed system can be secured by requiring participants to present proof of work and rewarding them for participation. The Bitcoin digital currency introduced this mechanism, which is adopted by almost all contemporary digital currencies and related services. A natural process leads participants of such systems to form pools, where members aggregate their power and share the rewards. Experience with Bitcoin shows that the largest pools are often open, allowing anyone to join. It has long been known that a member can sabotage an open pool by seemingly joining it but never sharing its proofs of work. The pool shares its revenue with the attacker, and so each of its participants earns less. We define and analyze a game where pools use some of their participants to infiltrate other pools and perform such an attack. With any number of pools, no-pool-attacks is not a Nash equilibrium. With two pools, or any number of identical pools, there exists an equilibrium that constitutes a tragedy of the commons where the pools attack one another and all earn less than they would have if none had attacked. For two pools, the decision whether or not to attack is the miner's dilemma, an instance of the iterative prisoner's dilemma. The game is played daily by the active Bitcoin pools, which apparently choose not to attack. If this balance breaks, the revenue of open pools might diminish, making them unattractive to participants.