Game-Theoretical Analysis of Mining Strategy for Bitcoin-NG Blockchain Protocol (1911.00900v3)

Abstract: Bitcoin-NG, a scalable blockchain protocol, divides each block into a key block and many micro blocks to effectively improve the transaction processing capacity. Bitcoin-NG has a special incentive mechanism (i.e. splitting transaction fees to the current and the next leader) to maintain its security. However, this design of the incentive mechanism ignores the joint effect of transaction fees, mint coins and mining duration lengths on the expected mining reward. In this paper, we identify the advanced mining attack that deliberately ignores micro blocks to enlarge the mining duration length to increase the likelihood of winning the mining race. We first show that an advanced mining attacker can maximize its expected reward by optimizing its mining duration length. We then formulate a game-theoretical model in which multiple mining players perform advanced mining to compete with each other. We analyze the Nash equilibrium for the mining game. Our analytical and simulation results indicate that all mining players in the mining game converge to having advanced mining at the equilibrium and have no incentives for deviating from the equilibrium; the transaction processing capability of the Bitcoin-NG network at the equilibrium is decreased by advanced mining. Therefore, we conclude that the Bitcoin-NG blockchain protocol is vulnerable to advanced mining attack. We discuss how to reduce the negative impact of advanced mining for Bitcoin-NG.