Re: [bitcoin-dev] We need to fix the block withholding attack

[Jonathan Toomim <j@toom.im>]

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Another option for how to deal with block withholding attacks: Give the miner who finds the block a bonus. This could even be part of the coinbase transaction.

Block withholding is effective because it costs the attacker 0% and costs the pool 100%. If the pool's coinbase tx was 95% to the pool, 5% (1.25 BTC) to the miner, that would make block withholding attacks much more expensive to the attacker without making a huge impact on reward variance for small miners. If your pool gets attacked by a block withholding attack, then you can respond by jacking up the bonus ratio. At some point, block withholding attacks become unfeasibly expensive to perform. This can work because the pool sacrifices a small amount of variance for its customers by increasing the bonus, but the block attacker sacrifices revenue. This should make the attacker give up before the pool does.

This system already exists in p2pool, although there the reward bonus for the block's finder is only 0.5%.

This must have been proposed before, right? Anyone know of a good analysis of the game theory math?

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