A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> A new era of theoretical computer science addresses fundamental problems about auctions, networks, and human behavior. <s> BIB001 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> In this paper we describe the various scoring systems used to calculate rewards of participants in Bitcoin pooled mining, explain the problems each were designed to solve and analyze their respective advantages and disadvantages. <s> BIB002 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> Many large decentralized systems rely on information propagation to ensure their proper function. We examine a common scenario in which only participants that are aware of the information can compete for some reward, and thus informed participants have an incentive not to propagate information to others. One recent example in which such tension arises is the 2009 DARPA Network Challenge (finding red balloons). We focus on another prominent example: Bitcoin, a decentralized electronic currency system. Bitcoin represents a radical new approach to monetary systems. It has been getting a large amount of public attention over the last year, both in policy discussions and in the popular press. Its cryptographic fundamentals have largely held up even as its usage has become increasingly widespread. We find, however, that it exhibits a fundamental problem of a different nature, based on how its incentives are structured. We propose a modification to the protocol that can eliminate this problem. Bitcoin relies on a peer-to-peer network to track transactions that are performed with the currency. For this purpose, every transaction a node learns about should be transmitted to its neighbors in the network. As the protocol is currently defined and implemented, it does not provide an incentive for nodes to broadcast transactions they are aware of. In fact, it provides an incentive not to do so. Our solution is to augment the protocol with a scheme that rewards information propagation. Since clones are easy to create in the Bitcoin system, an important feature of our scheme is Sybil-proofness. We show that our proposed scheme succeeds in setting the correct incentives, that it is Sybil-proof, and that it requires only a small payment overhead, all this is achieved with iterated elimination of dominated strategies. We complement this result by showing that there are no reward schemes in which information propagation and no self-cloning is a dominant strategy. <s> BIB003 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> The Bitcoin digital currency depends for its correctness and stability on a combination of cryptography, distributed algorithms, and incentivedriven behavior. We examine Bitcoin as a consensus game and determine that it relies on separate consensus about the rules and about game state. An important aspect of Bitcoin’s design is the mining mechanism, in which participants expend resources on solving computational puzzles in order to collect rewards. This mechanism purportedly protects Bitcoin against certain technical problems such as inconsistencies in the system’s distributed log data structure. We consider the economics of Bitcoin mining, and whether the Bitcoin protocol can survive attacks, assuming that participants behave according to their incentives. We show that there is a Nash equilibrium in which all players behave consistently with Bitcoin’s reference implementation, along with innitely many equilibria in which they behave otherwise. We also show how a motivated adversary might be able to disrupt the Bitcoin system and \crash" the currency. Finally, we argue that Bitcoin will require the emergence of governance structures, contrary to the commonly held view in the Bitcoin community that the currency is ungovernable. <s> BIB004 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> Bitcoin is the first and most popular decentralized cryptocurrency to date. In this work, we extract and analyze the core of the Bitcoin protocol, which we term the Bitcoin backbone, and prove two of its fundamental properties which we call common prefix and chain quality in the static setting where the number of players remains fixed. Our proofs hinge on appropriate and novel assumptions on the “hashing power” of the adversary relative to network synchronicity; we show our results to be tight under high synchronization. <s> BIB005 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> Bit coin has emerged as the most successful cryptographic currency in history. Within two years of its quiet launch in 2009, Bit coin grew to comprise billions of dollars of economic value despite only cursory analysis of the system's design. Since then a growing literature has identified hidden-but-important properties of the system, discovered attacks, proposed promising alternatives, and singled out difficult future challenges. Meanwhile a large and vibrant open-source community has proposed and deployed numerous modifications and extensions. We provide the first systematic exposition Bit coin and the many related crypto currencies or 'altcoins.' Drawing from a scattered body of knowledge, we identify three key components of Bit coin's design that can be decoupled. This enables a more insightful analysis of Bit coin's properties and future stability. We map the design space for numerous proposed modifications, providing comparative analyses for alternative consensus mechanisms, currency allocation mechanisms, computational puzzles, and key management tools. We survey anonymity issues in Bit coin and provide an evaluation framework for analyzing a variety of privacy-enhancing proposals. Finally we provide new insights on what we term disinter mediation protocols, which absolve the need for trusted intermediaries in an interesting set of applications. We identify three general disinter mediation strategies and provide a detailed comparison. <s> BIB006 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> Besides attracting a billion dollar economy, Bitcoin revolutionized the field of digital currencies and influenced many adjacent areas. This also induced significant scientific interest. In this survey, we unroll and structure the manyfold results and research directions. We start by introducing the Bitcoin protocol and its building blocks. From there we continue to explore the design space by discussing existing contributions and results. In the process, we deduce the fundamental structures and insights at the core of the Bitcoin protocol and its applications. As we show and discuss, many key ideas are likewise applicable in various other fields, so that their impact reaches far beyond Bitcoin itself. <s> BIB007 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> Blockchain technology, as a decentralized and non-hierarchical platform, has the potential to replace centralized systems. Yet, there are several challenges inherent in the blockchain structure. One of the deficiencies of the existing blockchains is a convenient information propagation technique enhancing incentive-compatibility and bandwidth efficiency. The transition from a centralized system into distributed one brings along game theoretical concerns. Especially for the permissionless blockchains, information propagation should be incentive-compatible just like any other communication or computational costly operation. Another important issue is that information is relayed via gossip-like protocols causing excessive bandwidth usage. Each information is propagated at least twice: first to advertise its existence, second to announce that it is final and validated, i.e., added to the block. ::: In this work, we investigate two distinct aspects of the information propagation of the blockchains: incentive and routing mechanisms. For the former part, we analyze the necessary and sufficient conditions of the Sybil-proof incentive-compatible propagation methodology. We show the impossibility result of the Sybil-proofness in 1-connected network model. For the rest, we prove that the propagation decision is independent of the capabilities of the receiving side. Then, we formulate the generic fee sharing function which encourages rational participants to propagate information. Regarding the bandwidth efficiency, we study a special type of consensus protocols where the block owner (round leader) is validated before the block is created. We present a smart routing mechanism which the redundant communication cost from the size of the network to the scale of average shortest path length. Finally, we combine the incentive and routing mechanisms in a storage-efficient way. <s> BIB008 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> A blockchain is a distributed ledger for recording transactions, maintained by many nodes without central authority through a distributed cryptographic protocol. All nodes validate the information to be appended to the blockchain, and a consensus protocol ensures that the nodes agree on a unique order in which entries are appended. Consensus protocols for tolerating Byzantine faults have received renewed attention because they also address blockchain systems. This work discusses the process of assessing and gaining confidence in the resilience of a consensus protocols exposed to faults and adversarial nodes. We advocate to follow the established practice in cryptography and computer security, relying on public reviews, detailed models, and formal proofs; the designers of several practical systems appear to be unaware of this. Moreover, we review the consensus protocols in some prominent permissioned blockchain platforms with respect to their fault models and resilience against attacks. <s> BIB009 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> Blockchain technologies are gaining massive momentum in the last few years. Blockchains are distributed ledgers that enable parties who do not fully trust each other to maintain a set of global states. The parties agree on the existence, values and histories of the states. As the technology landscape is expanding rapidly, it is both important and challenging to have a firm grasp of what the core technologies have to offer, especially with respect to their data processing capabilities. In this paper, we first survey the state of the art, focusing on private blockchains (in which parties are authenticated). We analyze both in-production and research systems in four dimensions: distributed ledger, cryptography, consensus protocol and smart contract. We then present BLOCKBENCH, a benchmarking framework for understanding performance of private blockchains against data processing workloads. We conduct a comprehensive evaluation of three major blockchain systems based on BLOCKBENCH, namely Ethereum, Parity and Hyperledger Fabric. The results demonstrate several trade-offs in the design space, as well as big performance gaps between blockchain and database systems. Drawing from design principles of database systems, we discuss several research directions for bringing blockchain performance closer to the realm of databases. <s> BIB010 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> In September 2015, the United Nations General Assembly accepted the 2030 Development Agenda, which has included 92 paragraphs, and the Paragraph 91 defined 17 sustainable development goals (SDGs) and 169 associated targets. The goal of this paper is to discover the correlations among SDGs and information and communications technologies (ICTs). This paper discusses the roles and opportunities that ICTs play in pursuing the SDGs. We identify a number of research gaps to those three pillars, social, economic, and environmental perspectives, of sustainable development. After extensive literature reviews on the SDG-related research initiatives and activities, we find that the majority of contributions to SDGs recognized by the IEEE and ACM research communities have mainly focused on the technical aspects while there are lack of the holistic social good perspectives. Therefore, there are essential and urgent needs to raise the awareness and call for attentions on how to innovate and energize ICTs in order to best assist all nations to achieve the SDGs by 2030. <s> BIB011 </s> A Survey on Consensus Mechanisms and Mining Strategy Management in Blockchain Networks <s> E. Nakamoto Consensus Protocol and Incentive Compatibility <s> Incorporating accountability mechanisms in online services requires effective trust management and immutable, traceable source of truth for transaction evidence. The emergence of the blockchain technology brings in high hopes for fulfilling most of those requirements. However, a major challenge is to find a proper consensus protocol that is applicable to the crowdsourcing services in particular and online services in general. Building upon the idea of using blockchain as the underlying technology to enable tracing transactions for service contracts and dispute arbitration, this paper proposes a novel consensus protocol that is suitable for the crowdsourcing as well as the general online service industry. The new consensus protocol is called “Proof-of-Trust” (PoT) consensus; it selects transaction validators based on the service participants’ trust values while leveraging RAFT leader election and Shamir's secret sharing algorithms. The PoT protocol avoids the low throughput and resource intensive pitfalls associated with Bitcoin’ s “Proof-of-Work” (PoW) mining, while addressing the scalability issue associated with the traditional Paxos-based and Byzantine Fault Tolerance (BFT)-based algorithms. In addition, it addresses the unfaithful behaviors that cannot be dealt with in the traditional BFT algorithms. The paper demonstrates that our approach can provide a viable accountability solution for the online service industry. <s> BIB012
To jointly address the problems of pseudonymity, scalability and poor synchronization, Nakamoto proposed in  a permissionless consensus protocol based on a framework of cryptographic block-discovery racing game. This is also known as the Proof of Work (PoW) scheme BIB010 , BIB007 . From a single node's perspective, the Nakamoto consensus protocol defines three major procedures, namely, the procedure of chain validation, the procedure of chain comparison and extension and the procedure of PoW solution searching BIB005 . The chain validation predicate provides a Boolean judgment on whether a given chain of blocks has the valid structural properties. It checks if each block in the chain provides valid PoW solution and no conflict between transactions as well as the historical records exists. The function of chain comparison and extension compares the length of a set of chains, which may be either received from peer nodes or locally proposed. It guarantees that an honest node only adopts the longest proposal among the candidate views of the blockchain. The function of PoW solution searching is the main "workhorse" of the protocol and defines a cryptographic puzzle-solving procedure in a computation-intensive manner. In brief, PoW solution requires exhaustively querying a cryptographic hash function for a partial preimage generated from a candidate block, whose hashcode satisfies a pre-defined condition. For simplicity of exposition, let H(·) denote the hash function and x denote the binary string assembled based on the candidate block data including the set of transactions (e.g., Merkle root), the reference hash pointers, etc. Then, we can formally define the PoW puzzle and solution as follows: Definition 1. Given an adjustable hardness condition parameter h, the process of PoW puzzle solution aims to search for a solution string, nonce, such that for a given string x assembled based on the candidate block data, the hashcode (i.e, the target block header bh) of the concatenation of x and nonce is smaller than a target value D(h): where for some fixed length of bits L, D(h) = 2 L−h . The Nakamoto protocol is computation-intensive since to win the puzzle solving race, a node needs to achieve a hash querying rate as high as possible. This property financially prevents the Sybil attacks of malicious nodes by merely creating multiple pseudo identities. On the other hand, the economic cost (mainly electricity consumption) also renders it impractical for any node to voluntarily participate the consensus process at a consistent economic loss. To ensure proper functioning of a permissionless blockchain network, the Nakamoto protocol introduces incentives to probabilistically award the consensus participants based on an embedded Figure 5 . A (temporary) fork happens at nodes 1 and 2 when their local PoW processes lead to different proposals of the new blockchain header, i.e., (t + 3) and (t + 3) ′ at the same time. Both (t + 3) and (t + 3) ′ satisfy (1). mechanism of token supply and transaction tipping  . From a game theoretic point of view, an implicit assumption adopted by the Nakamoto consensus protocol is that all the participant nodes are individually rational BIB001 . In return, the consensus mechanism is expected to be incentive compatible. In other words, the consensus protocol should ensure that any consensus node will suffer from finical loss whenever it deviates from truthfully following the protocol. However, the incentive compatibility of the Nakamoto protocol has been openly questioned BIB003 -  . Since the Nakamoto protocol allows nodes to propose arbitrary blocks from their local pending transaction set, it is inevitable for the network to experience blockchain expansion race with a (temporary) split, i.e., fork, in the local views of the blockchain state BIB007 ,  (see Figure 5 ). To guarantee the consensus properties and thus convergence to one canonical blockchain state, the Nakamoto protocol relies on the assumption that the majority of the consensus nodes follow the longest chain rule and are altruistic in information forwarding. It has been found in BIB003 , BIB008 that rational consensus nodes may not have incentive for transaction/block propagation. As a result, the problem of blockchain forking may not be easily resolved in the current framework of the Nakamoto protocol. Special measures should be further taken in the protocol design, and a set of folklore principles has been suggested to gear the consensus mechanism towards a protocol for secured and sustainable blockchain networks BIB006 , BIB011 - BIB004 : • The consensus mechanism should enforce that propagating information and extending the longest chain of block are the monotonic strategies of the consensus nodes BIB004 . In other words, all the sub-stages in the consensus process should be incentive-compatible in an open environment with the tolerance to Byzantine and unfaithful faults. • The consensus mechanism should encourage decentralization and fairness. Namely, it should not only discourage coalition, e.g., botnets and mining pools BIB005 , BIB002 , but also make the consensus process an uneasy prey of the adversaries with cumulated computation power. • The consensus mechanism should strike a proper balance between processing throughput and network scalability BIB009 , BIB012 .