# 5.5 Mining Incentives and Strategies

###### tags: `Blockchain`
The following notes are taken from [Coursera](https://www.coursera.org/learn/cryptocurrency/home/week/2)

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### Game-theoretic analysis of mining
Several strategic decisions
- Which transactions to include in a block
- Default: any above minimum transaction fee
- Which block to mine on top of
- Default: longest valid chain
- How to choose between colliding blocks
- Default: first block heard
- When to announce new blocks
- Default: immediately after finding them

### Game-theoretic analysis of mining
Assume you control 0 < a < 1 of mining power
Can you profit from a non-default strategy?
:::success
For some a, YES, though analysis is ongoing!
:::

### Forking Attacks
- Certainly possible if a > 0.5
- may be possible with less
- avoid block collisions
- Attack is detectable
- Might be reversed
- Might crash exchange rate
- 

### Forking Attacks via Bribery
- **Idea:** building a > 0.5 is expensive. Why not rent instead?
- Payment techniques:
- out-of-band bribery
- run a mining pool at a loss
- insert large "tips" in the block chain

:::success
This is an open problem!
:::


### Block-withholding Attacks
- Improved strategy for any a if you can win every race
- ideal network position
- bribery?
- With a 50% chance of winning races, improved strategy for a > 0.25
- Not yet observed in practice

### Punitive Forking
- Suppose you want to blacklist transactions from address X
- freeze an individual's moeny forever
- **Extreme strategy:** annouce that you will refuse to mine on any chain with a transaction from X

:::danger
With a < 0.5, you'll soon fall behind the network
:::

### Feather-forking Strategy
- **To blacklist transactions from X,** announce that you will refuse to mine *directly* on any block with a transaction from X
- but you'll concede after n confirming blocks
- Chance of pruning an offending block is a^2

### Response to Feather Forking
- **For other miners,** including a transaction from X induces an a^2 chacne of losing a block
- Might be safer to join the blaclist
- Can enforce a blacklist with a < 0.5

:::success
Success depends on convincing other miners you'll fork
:::

### Feather-forking: What is it good for?
- Freezing individual bitcoin owners
- ransom/extortion
- law enforcement?
- Enforcing a min transaction fee...

### A Second Look at Transaction Fees
Default policy:

priority = sum(input_value * input_age)/size_in_bytes

Accept without fees if:

priority > 0.576


### Summary
- Miners are free to implement any strategy
- Very little non-default behavior in the wild
- No complete game-theoretic model exists