Understanding Selfish Mining
Selfish mining is a concept first proposed by Cornell researchers in 2013.
It describes a strategy where miners collaborate to increase their profits by creating separate forks and withholding mined blocks from the rest of the network.
This behavior can negatively impact the overall health of a blockchain protocol, as it increases the risk of centralization.
Ecosystem Dynamics
In Bitcoin mining, various factors such as mining machine efficiency, electricity costs, and hash power contributed to the network affect the mining process.
The design of Bitcoin’s mining system aims to maintain decentralization by rewarding individual miners on the blockchain.
This has led to the popularity of mining pools, where miners combine their resources to receive consistent rewards.
Strategies, Implications, and the Threat
However, using selfish mining can optimize their mining efforts and potentially increase their profits.
By intentionally withholding newly mined blocks from the public network, they can accelerate mining and reduce resource waste.
The selfish miners create forked blockchains that are smaller than the public blockchain.
However, they time the revelation of new blocks strategically to attract miners from the public chain to join their forked chain.
This process continues until the forked chain becomes larger and more lucrative to mine than the original chain.
This can lead to the forked chain gaining dominance over the original chain, compromising decentralization.
Fragile Balance of Trust
It is important to note that selfish mining is not a sustainable long-term strategy.
If successfully executed, it would undermine the value of the miners’ tokens by damaging public trust in the cryptocurrency.
Additionally, if all miners engage in selfish mining, the overall benefits are likely to be minimal.