Why Bitcoin Mining Pools Aren’t Incentivized to Broadcast Blocks Quickly

By September 30, 2016Bitcoin Business

It is generally accepted that latency in block propagation is one of the bottlenecks for Bitcoin scaling. This is why many of Bitcoin’s most active developers and researchers have presented a series of solutions to compress blocks and speed up propagation over the past years. It is not as well known that these solutions may not suffice on their own. Due to a practice called “spy mining” or “pool-watcher mining,” Bitcoin mining has increasingly come to rely on the data and network infrastructure provided by mining pools. As a result, many mining pools are not necessarily incentivized to broadcast their blocks to the network as fast as they can — regardless of latency in block propagation. Selfish mining To understand how this is possible, let’s first take a brief look at an older concept: “ selfish mining ." In short, selfish mining is a type of attack where miners find new blocks, but do not immediately broadcast these blocks to the network. The miners do, however, mine on top of any new found block they find themselves: they are mining “selfishly.” This gives them a head start to find the next block, while all other competitors are wasting their resources mining on top of an older block. But hiding a new block is also risky. While a selfish miner hides a block, competitors may find a competing block. If this competing block makes its way through the network before the selfish miner’s block does, the selfish miner would have wasted its own resources by hiding the block: the block is now worthless. For selfish mining to be profitable, therefore, the attacker requires a significant amount of hash power on the network — some 25 to 30 percent at least. And more than half of all hash power on the […]

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