Incentive Compatibility of Bitcoin Mining Pool Reward Functions
نویسندگان
چکیده
In this paper we introduce a game-theoretic model for reward functions within a single Bitcoin mining pool. 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-lastN-shares is also incentive compatible in a more general model.
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