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In blockchain networks adopting the proof-of-work schemes, the monetary incentive is introduced by the Nakamoto consensus protocol to guide the behaviors of the full nodes (i.e., block miners) in the process of maintaining the consensus…
Proof-of-work (PoW) cryptocurrencies rely on a balance of security and fairness in order to maintain a sustainable ecosystem of miners and users. Users demand fast and consistent transaction confirmation, and in exchange drive the adoption…
Proof-of-Work (PoW) consensus is traditionally analyzed under the assumption that all miners incur similar costs per unit of computational effort. In reality, costs vary due to factors such as regional electricity cost differences 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…
We propose DIPS Difficulty-based Incentives for Problem Solving), a simple modification of the Bitcoin proof-of-work algorithm that rewards blockchain miners for solving optimization problems of scientific interest. The result is a…
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…
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…
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…
Modern systems, such as digital platforms and service systems, increasingly rely on contextual bandits for online decision-making; however, their deployment can inadvertently create unfair exposure among arms, undermining long-term platform…
Conventional double-spending attack models ignore the revenue losses stemming from the orphan blocks. On the other hand, selfish mining literature usually ignores the chance of the attacker to double-spend at no-cost in each attack cycle.…
The emerging cryptocurrency market has lately received great attention for asset allocation due to its decentralization uniqueness. However, its volatility and brand new trading mode have made it challenging to devising an acceptable…
An attacker who breaks into an authentication server and steals all of the cryptographic password hashes is able to mount an offline-brute force attack against each user's password. Offline brute-force attacks against passwords are…
Proof-of-Work mining is intended to provide blockchains with robustness against double-spend attacks. However, an economic analysis that follows from Budish (2018), which considers free entry conditions together with the ability to rent…
Optimistic responsiveness -- the ability of a consensus protocol to operate at the speed of the network -- is widely used in consensus protocol design to optimize latency and throughput. However, blockchain applications incentivize…
In recent years, cryptocurrencies have attracted growing attention from both private investors and institutions. Among them, Bitcoin stands out for its impressive volatility and widespread influence. This paper explores the predictability…
We study the computation contests where players compete for searching a solution to a given problem with a winner-take-all reward. The search processes are independent across the players and the search speeds of players are proportional to…
We present and validate a novel mathematical model of the blockchain mining process and use it to conduct an economic evaluation of the double-spend attack, which is fundamental to all blockchain systems. Our analysis focuses on the value…
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…
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…
The mining of bitcoin is modeled using system dynamics, showing that the past evolution of the network hash rate can be explained to a large extent by an efficient market hypothesis applied to the mining of blocks. The possibility of a…