From: "Luke-Jr" <luke@dashjr.org>
To: Peter Vessenes <peter@coinlab.com>
Date: Mon, 4 Jun 2012 02:04:55 +0000
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Message-Id: <201206040204.57503.luke@dashjr.org>
Cc: Bitcoin Dev <bitcoin-development@lists.sourceforge.net>
Subject: Re: [Bitcoin-development] Defeating the block withholding attack
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On Monday, June 04, 2012 1:43:42 AM Peter Vessenes wrote:
> Does it have asymmetric payoff for an attacker, that is, over time does it
> pay them more to spend their hashes attacking than just mining?

That depends on the pool's reward scheme. Some complicated forms are capable 
of getting "bonus" earnings out of the pool. Under all systems, the attacker 
at least gains the "hurt the pool" benefit. Given the frequency of DDoS 
attacks on pools, it is clear there are people who will even pay for attacks 
that provide no other benefit than harming pools. Under all systems, the 
attacker doesn't lose out in any significant way.

> My gut is that it pays less well than mining, meaning I think this is
> likely a small problem in the aggregate, and certainly not something we
> should try and fork the blockchain for until there's real pain.

If we wait until there's real pain, it will be a painful fork. If we plan it 
1-2 years out, people have time to upgrade on their own before it breaks.

> Consider, for instance, whether it pays better than just mining bitcoins
> and spending those on 'bonuses' for getting users to switch from a pool you
> hate.

With this attack, attackers can hurt the pool's "luck factor" *and* spend the 
bitcoins they earn to bribe users away.