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[10-8]When Cryptocurrencies Mine Their Own Business

Date:2015-09-30

  SKLCS Seminar by Jason Teutsch   

  

  Title: When Cryptocurrencies Mine Their Own Business

  Speaker: Jason Teutsch (National University of Singapore)

  Time: 15:00, 8th October 2015

  Venue: Seminar Room (334), Level 3, Building 5, Institute of Software, Chinese Academy of Sciences.

 

  Abstract:

  Bitcoin and hundreds of other cryptocurrencies employ a consensus protocol called Nakamoto consensus which reward miners for maintaining a public blockchain. In this paper, we study the security of this protocol with respect to rational miners and show how a minority of the computation power can incentivize the rest of the network to accept a blockchain of the minority's choice. By deviating from the mining protocol, a mining pool which controls at least 38.2% of the network's total computational power can, with modest financial capacity, gain mining advantage over honest mining. Such an attack creates a longer valid blockchain by forking the honest blockchain, and the attacker's blockchain need not disrupt any “legitimate” non-mining transactions present on the honest blockchain. By subverting the consensus protocol, the attacking pool can double-spend money or simply create a blockchain that pays mining rewards to the attacker's pool. We show that our attacks are easy to encode in any Nakamoto-consensus-based cryptocurrency which supports a scripting language that is sufficiently expressive to encode its own mining puzzles.