Bitcoin’s approach to solving the double spending problem is to make a collusion and attack on the network prohibitively expensive. One of the main factors that will determine Bitcoin’s chance of survival in the long-term is whether the behavior that maximizes the profits of miners contributes to or sabotages the health of the network.
The game theory that determines this is complex and our understanding of it still incomplete. But research is increasing and two people who have been at the forefront of this work are , a professor in computer science at Cornell University, and Ittay Eyal, a post-doc at the same department.
They joined us for a fascinating discussion of their work on ‘selfish mining’, the incetive structure that underlies Bitcoin and their recent positive conclusions from the Miner’s Dilemma.
Topics we discussed in this episode
- Emin Gün Sirer’s early interest in cryptocurrencies and work on a cryptocurrency to incentivize bittorrent users in 2004
- What selfish mining is and how miners could profit from withholding blocks
- How an attacker would execute a selfish mining attack
- Why the miner’s dilemma implies that the equilibrium might be small mining pools
- Why the lack of security of clients and servers is holding back adoption