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Double-Spend Counter-Attacks: Threat of Retaliation in Proof-of-Work Systems

Published onNov 18, 2020
Double-Spend Counter-Attacks: Threat of Retaliation in Proof-of-Work Systems
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Abstract

Proof-of-Work mining is intended to provide blockchains with robustness against double-spend attacks.However, an economic analysis that follows from Budish[1], considering free entry conditions together with the ability to rent sufficient hashrate to conduct an attack, suggests that the resulting block rewards can make the attack cheap. We formalize a defense to double-spend attacks, this defense having been proposed before but largely dismissed. We show that when the victim can counterattack in the same way as the attacker, this leads to a variation on the classic War of Attrition model from game theory. We show that, under mild assumptions, the threat of this kind of counterattack induces a subgame perfect equilibrium in which no attack occurs in the first place.

Double-Spend Counter-Attacks: Threat of Retaliation in PoW Systems - Daniel Moroz - #CryptoEconSys20

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