Many of today's crypto currencies use blockchains as decentralized ledgers and secure them with proof of work. In case of a fork of the chain, Bitcoin's rule for achieving consensus is selecting the longest chain and discarding the other chain as stale. It has been demonstrated that this consensus rule has a weakness against selfish mining in which the selfish miner exploits the variance in block generation by partially withholding blocks. In Ethereum, however, under certain conditions stale blocks don't have to be discarded but can be referenced from the main chain as uncle blocks yielding a partial reward. This concept limits the impact of network delays on the expected revenue for miners. But the concept also reduces the risk for a selfish miner to gain no rewards from withholding a freshly minted block. This paper uses a Monte Carlo simulation to quantify the effect of uncle blocks both to the profitability of selfish mining and the blockchain's security in Ethereum (ETH). A brief outlook about a recent Ethereum Classic (ETC) improvement proposal that weighs uncle blocks during the selection of the main chain will be given.
The Bitcoin cryptocurrency records its transactions in a public log called the blockchain. Its security rests critically on the distributed protocol that maintains the blockchain, run by participants called miners. Conventional wisdom asserts that the mining protocol is incentive-compatible and secure against colluding minority groups, that is, it incentivizes miners to follow the protocol as prescribed. The Bitcoin protocol requires nodes to quickly distribute newly created blocks. Strong nodes can, however, gain higher payoffs by withholding blocks they create and selectively postponing their publication. The existence of such selfish mining attacks was first reported by Eyal and Sirer, who have demonstrated a specific deviation from the standard protocol (a strategy that we name SM1). Bitcoin is a "crypto currency", a decentralized electronic payment scheme based on cryptography. Bitcoin economy grows at an incredibly fast rate and is now worth some 10 billions of dollars. Bitcoin mining is an activity which consists of creating (minting) the new coins which are later put into circulation. Miners spend electricity on solving cryptographic puzzles and they are also gatekeepers which validate bitcoin transactions of other people. Miners are expected to be honest and have some incentives to behave well. However. In this paper we look at the miner strategies with particular attention paid to subversive and dishonest strategies or those which could put bitcoin and its reputation in danger. We study in details several recent attacks in which dishonest miners obtain a higher reward than their relative contribution to the network. In particular we revisit the concept of block withholding attacks and propose a new concrete and practical block withholding attack which we show to maximize the advantage gained by rogue miners. RECENT EVENTS: it seems that the attack was recently executed, see Section XI-A. Selfish mining, originally discovered by [9], is a well-known attack where a selfish miner, under certain conditions, can gain a disproportionate share of reward by deviating from the honest behavior. In this paper, we expand the mining strategy space to include novel "stubborn" strategies that, for a large range of parameters, earn the miner more revenue. Consequently, we show that the selfish mining attack is not (in general) optimal. Further, we show how a miner can further amplify its gain by non-trivially composing mining attacks with network-level eclipse attacks. We show, surprisingly, that given the attacker's best strategy, in some cases victims of an eclipse attack can actually benefit from being eclipsed!