In our last blog, we have seen how miners have found an illegal way of exploiting the entire mining process. They have created a strategy called Selfish mining where they try to manipulate the entire mining network by hiding some important details.
Profitable Selfish Mining
According to the miners, it saves their extra effort, which is wasted during finding a block solution, they quickly grab the real block and withheld its details, they don’t allow the broadcasting of the block until their motive is fulfilled.
- They parallelly create a hoax among the public network while smoothly running their private network.
- The minimum profit that could be earned by practising selfish mining is found to be around 22 percent as wholesome.
- The above percentage is calculated if two miners collabs together to mine a block.
- Selfish mining ensures the profitability rate over a mining process when you have a great number of hash rates, i.e., the more hash rates are invested the more profit is made.
Example Of Selfish Mining
Let’s take an example of two mining pools named A and B where A maintains a private chain mining while B operates on a public blockchain network, nowhere what happens:
- The mining pool A will now be able to mine in both private as well as public blockchain networks.
- Bitcoin mining pool is an honest miner and blocks transparently within the public blockchain network, while the A mines in a confidential manner.
- Now the details of the transaction made by the mining pool A will be depending upon the choice of A, whether he wants to broadcast the news of the mining process or want to hide the facts about some mined block.
- But mining pool can’t perform such things over a public network, he would be publishing everything till he had mined, if its initial point was 1 then they have to mine until they complete a successful round of mining.
- In this whole mining process, A can choose whether to mine along with the public chain or within his private blockchain; if he happens to do the latter one, he can wait until the private chain gets longer than the public chain.
- After the private chain gets longer, he will quit the public chain and would earn profit by broadcasting the details about the hidden data and facts.
- Where the mining pool B will suffer from the loss and won’t be able to earn a fair amount of reward.
Profit Or Not
The reason that blockchain selfish mining is a threat but not a profit-making opportunity is because miners choose to use a malicious way of mining, it not only puts a question mark over the security of a public ledger but also corrupts the way of honest mining. It is a type of economic attack which uses unfair advantages of a decentralized cash system, where no third-party authorizes the transaction and everything is distributed among the peers itself.
It also creates an autocracy among the miners, who doesn’t publish the details immediately after discovering the real block but chooses the consecutive timing to increase the gap between two successive mining blocks. He also has to bear loss sometimes to create discrepancies among the miners, like sometimes broadcasting the entire mined blocks which shifted the focus of the other miners from their effort of finding a block and losing the revenue profitability.
Therefore, performing selfish mining involves a high risk in the name of security breach and taking unfair advantages due to certain loopholes in the decentralized cash system. You need to know more about the myths about cryptocurrency . It not only puts a full stop to the selfish miner’s short term revenue collection but also reduces the chances of other miners to earn the revenue from the attacker’s plan. And it forces them to join the network of attackers thus increasing his exercises of mining power than others.
You may also like: What Is a Selfish Mining Attack?
Image source: Shutterstock.com