Related papers: Analysis of Bitcoin Pooled Mining Reward Systems
Mining for Bitcoins is a high-risk high-reward activity. Miners, seeking to reduce their variance and earn steadier rewards, collaborate in pooling strategies where they jointly mine for Bitcoins. Whenever some pool participant is…
This paper proposes a conceptual framework for the analysis of reward sharing schemes in mining pools, such as those associated with Bitcoin. The framework is centered around the reported shares in a pool instead of agents and results in…
Bitcoin mining presents a significant economic incentive for efficient hashing and broadcast of data, both parameters stemming from the Proofs of Work used to advance the network. This incentive has led to the development of Bitcoin…
The rewards a blockchain miner earns vary with time. Most of the time is spent mining without receiving any rewards, and only occasionally the miner wins a block and earns a reward. Mining pools smoothen the stochastic flow of rewards, and…
A soft control of the network activity through varying reward in a proof-of-work (PoW) cryptocurrency is reported. Rewards are the necessity to incent the contributors activities (i.e., mining) in order to maintain the PoW network. Contrary…
Miners play a key role in cryptocurrencies such as Bitcoin: they invest substantial computational resources in processing transactions and minting new currency units. It is well known that an attacker controlling more than half of the…
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…
The resource-consuming mining of blocks on a blockchain equipped with a proof of work consensus protocol bears the risk of ruin, namely when the operational costs for the mining exceed the received rewards. In this paper we investigate to…
Mining blocks in a blockchain using the \textit{Proof-of-Work} consensus protocol involves significant risk, as network participants face continuous operational costs while earning infrequent capital gains upon successfully mining a block.…
Mining is a central operation of all proof-of-work (PoW) based cryptocurrencies. The vast majority of miners today participate in "mining pools" instead of "solo mining" in order to lower risk and achieve a more steady income. However, this…
We analyze Bitcoin mining from the perspective of a game and propose an optimal mining model that maximizes profits of pools and miners. The model is a two-stage Stackelberg game in which each stage forms a sub-game. In stage I, pools are…
We study the strategic implications that arise from adding one extra option to the miners participating in the bitcoin protocol. We propose that when adding a block, miners also have the ability to pay forward an amount to be collected by…
Mining fairness in blockchain refers to equality between the computational resources invested in mining and the block rewards received. There exists a dilemma wherein increasing the transaction processing capacity of a blockchain…
Following the publication of Bitcoin's arguably most famous attack, selfish mining, various works have introduced mechanisms to enhance blockchain systems' game theoretic resilience. Some reward mechanisms, like FruitChains, have been shown…
A blockchain faces two fundamental challenges. It must motivate users to maintain the system while preventing a minority of these users from colluding and gaining disproportionate control. Many popular public blockchains use monetary…
Digital payment schemes show an ever increasing importance. Out of the countless different schemes available this article focuses on the popular Bitcoin system. The authors provide a description of Bitcoin's unique technological basis and…
Cryptocurrencies that are based on Proof-of-Work (PoW) often rely on special purpose hardware to perform so-called mining operations that secure the system, with miners receiving freshly minted tokens as a reward for their work. A notable…
Proof-of-Work (PoW) is a popular consensus protocol used by Bitcoin since its inception. PoW has the well-known flaw of assigning all the reward to the single miner (or pool) that inserts the new block. This has the consequence of making…
Bitcoin mining is a wasteful and resource-intensive process. To add a block of transactions to the blockchain, miners spend a considerable amount of energy. The Bitcoin protocol, named 'proof of work' (PoW), resembles a lottery and the…
The Bitcoin payment system involves two agent types: Users that transact with the currency and pay fees and miners in charge of authorizing transactions and securing the system in return for these fees. Two of Bitcoin's challenges are (i)…