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Game-theoretic analysis of a block withholding attack on the Bitcoin consensus protocol

Karpova, Natalia (2019) Game-theoretic analysis of a block withholding attack on the Bitcoin consensus protocol. Bachelor's Thesis, Artificial Intelligence.


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Bitcoin is the most popular cryptocurrency nowadays. It is based on a decentralized peer-to-peer system built on blockchain data structure. The Bitcoin network incorporates some rules (consensus protocol) under which participant in the network search for new Bitcoins and develop the blockchain. Previously it was believed that the Bitcoin consensus protocol incentivizes participants to act in accordance with the protocol since it will give them the best outcome. Recent papers showed contrary findings. In this paper one type of attack - the block withholding attack, - is researched. A simulation with pools that perform block withholding attack against each other was replicated. The convergence analysis showed that the amount of pools have a significant positive influence on the convergence time. The simulation was then extended by allowing miners to switch between pools or mine solo. Contrary to the previous results, in the extended simulation the amount of pools does not have a significant influence on convergence time, however, a greater number of miners seems to result in an increase in convergence time. With extreme amount of miners in the system it seems unfeasible to find a Nash equilibrium due to computational complexity which is representative of a real state of the Bitcoin network. The modified definition of Pure Price of Anarchy, the value that intuitively measures the amount of computational power wasted on attacks, is proposed based on the extended simulation findings.

Item Type: Thesis (Bachelor's Thesis)
Supervisor nameSupervisor E mail
Degree programme: Artificial Intelligence
Thesis type: Bachelor's Thesis
Language: English
Date Deposited: 11 Jul 2019
Last Modified: 12 Jul 2019 07:34

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