Bitcoins Not so smart contracts

Garrett Keirns reports in Coindesk on a new paper about “Smart Contract-Based Bribes”, which “threaten” Bitcoin Mining Pools.

My first thought was, “duh!” Any kind of bribes in the blockchain expose miners to possible liability. It hasn’t happened yet, but it’s only a matter of time before someone, somewhere hauls a Bitcoin miner into court, charging them with abetting criminal activity by processing the records of illicit transactions.

But this isn’t what Kairns is talking about. He refers to a paper by Yaron Velntner, Jason Teutsch, and Loi Luu [2].  What the researchers are actually talking about something more nefarious, and actually quite amusing.

Their idea is basically to offer a corrupt payment to miners, enticing them to “work slower”, reducing the yield of the whole pool. Presumably, this benefits other miners who will beat out the hobbled pool.

The authors do a lot of careful work to show how to make it work, and I don’t completely understand the details. But clearly executable contracts are ideally suited for this and many other kinds of automated skimming. The paper notes a number of other examples.

This particular scam is one of the oldest tricks in the book (bribe the bank clerk to “lose” the records for a time), utilizing the 21st century technology and the peculiar “trustless” nature of cryptocurrencies. In the physical world, this kind of shenanigan is defeated by, well, trust.

The amusing part is that the  clever bit is the amount of work they do to make this dead simple scam work as a decentralized program, i.e., where no one actually knows or trusts any of the others involved. It is fascinating to watch this fetish for technology in action, working out proofs and algorithms that have little value except to prove that the fantasy world of “trustless” systems can simulate yet another kind of transaction. In this case, yet another undesirable kind of transaction.

(As an aside, I note that the report is published in something called the Cryptology ePrint Archive, an unrefereed repository patterned after arXiv and other preprint services.  A bit of a cargo cult, no?)

It would be so much simpler to just bribe or threaten the miner into colluding, and I’m sure that happens all the time. But it is fascinating to watch this fetish for technology in action.


  1. Garrett Keirns, Could Smart Contract-Based Bribes Threaten Bitcoin Mining Pools. Coindesk.2017, http://www.coindesk.com/smart-contract-bribes-bitcoin-mining-pools/
  2. Yaron Velner, Jason Teutsch, and Loi Luu, Smart Contracts Make Bitcoin Mining Pools Vulnerable. Report 2017/230, Cryptology ePrint Archive, 2017. http://eprint.iacr.org/2017/230

 

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