Why Buy When You Can Rent?

Abstract

The Bitcoin cryptocurrency introduced a novel distributed consensus mechanism relying on economic incentives. While a coalition controlling a majority of computational power may undermine the system, for example by double-spending funds, it is often assumed it would be incentivized not to attack to protect its long-term stake in the health of the currency. We show how an attacker might purchase mining power (perhaps at a cost premium) for a short duration via bribery. Indeed, bribery can even be performed in-band with the system itself enforcing the bribe. A bribing attacker would not have the same concerns about the long-term health of the system, as their majority control is inherently short-lived. New modeling assumptions are needed to explain why such attacks have not been observed in practice. The need for all miners to avoid short-term profits by accepting bribes further suggests a potential tragedy of the commons which has not yet been analyzed.