How Does the Choice of a Mining Pool Affect a Miner’s Exposure to Selfish Mining?
If a miner joins a pool that is large enough to execute a selfish mining attack, they are inadvertently participating in the attack, whether they are aware of the strategy or not. Conversely, if a miner is part of a small, honest pool, they are more likely to have their blocks orphaned by a large selfish pool, thus losing revenue.
Therefore, joining a very large pool carries the risk of centralization, while joining a very small pool carries the risk of being a victim.
Glossar
Exposure
Volatility ⎊ Exposure, within cryptocurrency and derivatives markets, represents the degree to which an instrument’s value can fluctuate due to shifts in underlying asset prices or implied volatility surfaces.
Selfish
Exploitation ⎊ In cryptocurrency derivatives and options trading, "selfish" denotes a strategic, albeit controversial, behavior primarily observed in Bitcoin mining.
Mining Pool
Consensus ⎊ Mining pools represent a collaborative effort among network participants to aggregate computational resources, increasing the probability of successfully mining blocks and earning associated rewards within a Proof-of-Work cryptocurrency system.
Mining
Process ⎊ Mining is the computational process, central to Proof-of-Work systems, where specialized hardware solves complex mathematical problems to validate transactions and create new blocks, thereby securing the network.
Selfish Mining
Block ⎊ The concept of selfish mining, initially observed within the Bitcoin protocol, describes a strategic deviation from standard proof-of-work consensus mechanisms.