"Zero Cost'' Majority Attacks on Permissionless Blockchains

Joshua Gans and Hanna Halaburda

No 31473, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: The core premise of permissionless blockchains is their reliable and secure operation without the need to trust any individual agent. At the heart of blockchain consensus mechanisms is an explicit cost (whether work or stake) for participation in the network and the opportunity to add blocks to the blockchain. A key rationale for that cost is to make attacks on the network, which could be theoretically carried out if a majority of nodes were controlled by a single entity, too expensive to be worthwhile. We demonstrate that a majority attacker can successfully attack with a negative cost, which shows that the protocol mechanisms are insufficient to create a secure network, and emphasizes the importance of socially driven mechanisms external to the protocol. At the same time, negative cost enables a new type of majority attack that is more likely to elude external scrutiny.

JEL-codes: D42 D82 E42 (search for similar items in EconPapers)
Date: 2023-07
New Economics Papers: this item is included in nep-pay and nep-reg
Note: PR
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Working Paper: "Zero Cost'' Majority Attacks on Permissionless Blockchains (2023)
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