On profitability of selfish mining
This addresses security vulnerabilities in Bitcoin's difficulty adjustment algorithm, which is critical for preventing selfish mining attacks that could destabilize the network.
The paper tackles the profitability of selfish mining in Bitcoin, finding that no strategy is more profitable than honest mining before a difficulty adjustment, making selfish mining an attack on the adjustment algorithm, and proposes a protocol improvement to immunize against it.
We review the so called selfish mining strategy in the Bitcoin network and compare its profitability to honest mining.We build a rigorous profitability model for repetition games. The time analysis of the attack has been ignored in the previous literature based on a Markov model,but is critical. Using martingale's techniques and Doob Stopping Time Theorem we compute the expected duration of attack cycles. We discover a remarkable property of the bitcoin network: no strategy is more profitable than the honest strategy before a difficulty adjustment. So selfish mining can only become profitable afterwards, thus it is an attack on the difficulty adjustment algorithm. We propose an improvement of Bitcoin protocol making it immune to selfish mining attacks. We also study miner's attraction to selfish mining pools. We calculate the expected duration time before profit for the selfish miner, a computation that is out of reach by the previous Markov models.