Mining strategies for completing the longest blockchain

Abstract

Bitcoin is an innovative decentralized cryptocurrency that records transactions in a public log, termed the blockchain. Due to delays in the Bitcoin network, the Bitcoin blockchain has the potential for forming forks. In this paper, we consider a mining strategy in which the player who created the fork can attract other miners by posting rewards and the third party (other miners) has the ability to choose the fork based on their interests. We provide a model to formalize the considered case and analyze its feasibility. Based on certain game theoretical models, the best policies for two players, termed the creator of the fork and the third party, are presented. Finally, some cases of the considered model are simulated, and the average revenue of each player is compared with the theoretical revenue to verify the correctness of our strategy. When the delay varies from 0 to 400 milliseconds, adopting our strategy can acquire 23% more revenue than adopting the default strategy. The result shows that the default strategy of a miner is not always a good choice.