Incentive compatibility of bitcoin mining pool reward functions

Okke Schrijvers, Joseph Bonneau, Dan Boneh, Tim Roughgarden

Research output: Chapter in Book/Report/Conference proceedingConference contribution

Abstract

In this paper we introduce a game-theoretic model for reward functions in Bitcoin mining pools. Our model consists only of an unordered history of reported shares and gives participating miners the strategy choices of either reporting or delaying when they discover a share or full solution. We defined a precise condition for incentive compatibility to ensure miners strategy choices optimize the welfare of the pool as a whole. With this definition we show that proportional mining rewards are not incentive compatible in this model. We introduce and analyze a novel reward function which is incentive compatible in this model. Finally we show that the popular reward function pay-per-last-N-shares is also incentive compatible in a more general model.

Original languageEnglish (US)
Title of host publicationFinancial Cryptography and Data Security - 20th International Conference, FC 2016, Revised Selected Papers
EditorsBart Preneel, Jens Grossklags
PublisherSpringer Verlag
Pages477-498
Number of pages22
ISBN (Print)9783662549698
DOIs
StatePublished - 2017
Event20th International Conference on Financial Cryptography and Data Security, FC 2016 - Christ Church, Barbados
Duration: Feb 22 2016Feb 26 2016

Publication series

NameLecture Notes in Computer Science (including subseries Lecture Notes in Artificial Intelligence and Lecture Notes in Bioinformatics)
Volume9603 LNCS
ISSN (Print)0302-9743
ISSN (Electronic)1611-3349

Other

Other20th International Conference on Financial Cryptography and Data Security, FC 2016
CountryBarbados
CityChrist Church
Period2/22/162/26/16

ASJC Scopus subject areas

  • Theoretical Computer Science
  • Computer Science(all)

Fingerprint Dive into the research topics of 'Incentive compatibility of bitcoin mining pool reward functions'. Together they form a unique fingerprint.

Cite this