Bitcoin Blockchain Dynamics: the Selfish-Mine Strategy in the Presence of Propagation Delay

In the context of the `selfish-mine' strategy proposed by Eyal and Sirer, we study the effect of propagation delay on the evolution of the Bitcoin blockchain.

First, we use a simplified Markov model that tracks the contrasting states of belief about the blockchain of a small pool of miners and the `rest of the community' to establish that the use of block-hiding strategies, such as selfish-mine, causes the rate of production of orphan blocks to increase.

Then we use a spatial Poisson process model to study values of Eyal and Sirer's parameter $\gamma$, which denotes the proportion of the honest community that mine on a previously-secret block released by the pool in response to the mining of a block by the honest community.

Finally, we use discrete-event simulation to study the behaviour of a network of Bitcoin miners, a proportion of which is colluding in using the selfish-mine strategy, under the assumption that there is a propagation delay in the communication of information between miners.

;Comment: 14 pages, 13 Figures.

Submitted to a peer-reviewed journal