What Is Selfish Mining

What Is Selfish Mining? 

On October 31, 2008, Satoshi Nakamoto unveiled Bitcoin to the world through his now-famous Bitcoin white paper. According to Nakamoto’s paper, the goal of Bitcoin was to create a decentralized production and distribution of money.

If Bitcoin had to be summed up in a single word, it would be “decentralization.” Unfortunately, the act of selfish mining can greatly hinder the decentralization process.

What is selfish mining, and why is it so dangerous?

In simple terms, selfish mining is a strategy involving a small group of miners designed to increase their Bitcoin revenue through collusion. Collusion is a secret agreement between two or more parties to limit open competition by deceiving and misleading others in an attempt to gain an unfair advantage.

How big a problem is selfish mining in crypto? According to a paper written by researchers from Cornell University, the initial conclusion suggested that selfish mining was occurring within the BTC mining community. However, the overall problem was minimal.

The Cornell researchers provided substantial evidence that small groups of miners were earning more Bitcoin by hiding newly generated blocks from the main blockchain and creating a separate fork. Essentially, miners can increase their share of overall revenue by hiding new blocks and making them available to systems within their private network.

Could the Problem Escalate?

Initially, the fear within the Bitcoin community was that all miners would eventually join the private network because the mining rewards were greater. Ultimately, the Bitcoin blockchain would lose its decentralized nature, and a group of selfish miners would control the system. However, economists have argued that if all miners engaged in selfish mining, it would eventually lose its revenue advantage, and miners would return to the public blockchain.

The economists were correct in their argument because, during the past 11 years, the Bitcoin network has always remained a fully functioning public blockchain.

Selfish mining still exists, but it’s such a small proportion of the overall mining network that it has absolutely no effect on the public blockchain. Additionally, selfish mining is not as profitable today compared to 2013, when the Cornell researchers released their initial report.

Suggested Read: How Does Blockchain Compare to Other Innovations? – Cryptobite

China and Bitcoin Mining

Experts within the Bitcoin community agree that selfish mining will most likely never become a major problem within the network because of China. This is because China has mined approximately 70% of all Bitcoins in existence. Because there has never been a major outbreak of selfish mining within China, economists conclude that if selfish mining was so profitable, it would have already occurred in China.

Selfish mining goes against the very essence of Bitcoin, blockchain technology, smart contracts, and decentralization. It completely destroys the tireless efforts of the crypto community to create a new system of money. Therefore, the cryptocurrency community must always remain vigilant against selfish mining.

Brief Summary of Selfish Mining

  • Selfish mining is a strategy designed to increase Bitcoin revenue through collusion.
  • The strategy involves hiding newly generated blocks from the main blockchain.
  • A separate fork is created for the newly generated blocks within a private network.
  • Bitcoin experts agree that selfish mining does exist within the BTC network.
  • However, the number of selfish miners is very small.
  • 70% of all Bitcoins have been mined in China.
  • China has never experienced a major problem with selfish mining.
  • If selfish mining was so profitable, it would have already occurred in China.
  • The crypto community must constantly remain vigilant to selfish mining.

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