Attack Incentive and Security of Exchanging Tokens on Proof-of-Work Blockchain


In a consensus algorithm based on Proof-of-Work, miners are motivated by crypto rewards. Furthermore, security is guaranteed because a cost of a 50% attack chance is higher than the potential rewards. However, because of the sudden price jump of cryptocurrencies and cheap prices of mining machines like ASICs, the cost and profit were on equilibrium for Bitcoin in 2017. In this situation, attackers are motivated by the balance between hash power and profits. In this paper, we describe that there is relevance between mining power on the network and price of tokens that can be taken securely on a blockchain. Users who exchange tokens on the PoW blockchain should monitor mining power and exchange tokens cheaper than the attack cost so that profit and cost of the attacker are not in equilibrium.

Proceedings of the Asian Internet Engineering Conference on - AINTEC ‘18