A Novel Reward Based Approach to Secure Blockchain Mining Pools

Abstract

In decentralized blockchain systems such as Bitcoin, the miners are rewarded for generating new blocks and processing the transactions. In order to reduce the reward variance, the miners join mining pools where the miners aggregate their computational resources and divide the reward according to their contributions, measured by shares. However, such systems are prone to various security attacks 51% attack, selfish mining, race attacks,etc. The mining pools of the blockchain based networks tend to get centralized after some point of time which defeats the purpose of decentralization. The paper explores to understand the workings of the blockchain mining pools and the rewards systems allocated to those pools, Our proposed scheme is effective in detecting the behavior of a selfish miner and encourages the network to discard his efforts. The paper also proposes an alternative dynamic Poof of Work algorithm for efficient transaction on the network.

Keywords: Blockchain, Mining Pools, Selfish Mining, Proof-of-Work(PoW), Decentralized Applications