If you mine a block without revealing it, not only are you the only one that can mine the next block after that, but everyone is mining on the "wrong head". There's of course the risk that someone finds a different head in the meantime, but otherwise, you waste competitors' resources, while you get an advantage on the next block.
What makes it more likely that your first block ends up the next head and you're not wasting your own time on the second one if someone beats you to the first one while you're holding off?
They are not mining on the wrong head. They are mining on the current head. If they find a block it will be accepted as the new head and the withheld block will be rejected, so it's not wasted mining time at all.
1. They don't have to wait until another miner finds a block, they can just wait "for some time" and then release their block. All that time gives them the edge for the next block.
2. My understanding is that if two different blocks are found concurrently for the same head, then the network waits for the next block to select which "new head" is accepted. I.e. when there are competing chains, the longer chain wins. So I could imagine that a strategy could be to wait until some other miner announces their block and release yours precisely at that time, hence creating two competing chains. But you presumably have an edge because you have already been mining for a while on top of your block.
In a lottery, the more tickets you buy, the higher your chances to have the winning number.
If we played with a roulette and said "the goal is to be the first to have a winning number at the roulette" and I could try 50 times before you started, obviously I would be more likely to win our game, wouldn't I?
> In a lottery, the more tickets you buy, the higher your chances to have the winning number.
Yes, and it's exactly the same in bitcoin with the hashing power. Each hash is a ticket.
> If we played with a roulette and said "the goal is to be the first to have a winning number at the roulette" and I can try 50 times before you start, obviously I am more likely to win our game, am I not?
In bitcoin the goal is not to be the first. The goal is to find a winning hash that's on a chain that will not be abandoned. As soon as a new block is propagated you start mining on the new head. It doesn't change anything that you previously worked on another chain. The time spent on the previous chain is not wasted, unless finding a block wouldn't have got you the reward.
There is a kind of a race if 2 blocks are found simultaneously. But that's not really what this discussion is about, and in this case the outcome depends mostly on network connectivity.
It is precisely what this discussion is about. From the article:
> The key idea behind this strategy, called Selfish Mining, is for a pool to keep its discovered blocks private, thereby intentionally forking the chain. The honest nodes continue to mine on the public chain, while the pool mines on its own private branch. If the pool discovers more blocks, it develops a longer lead on the public chain, and continues to keep these new blocks private. When the public branch approaches the pool's private branch in length, the selfish miners reveal blocks from their private chain to the public.
> In bitcoin the goal is not to be the first. The goal is to find a winning hash that's on a chain that will not be abandoned.
The goal is to be the first (or very close to the first), because it makes it much more likely that your chain will not be abandoned. If you wait 2 days before you reveal your block, obviously it will be abandoned...
> The key idea behind this strategy, called Selfish Mining, is for a pool to keep its discovered blocks private, thereby intentionally forking the chain. The honest nodes continue to mine on the public chain, while the pool mines on its own private branch. If the pool discovers more blocks, it develops a longer lead on the public chain, and continues to keep these new blocks private. When the public branch approaches the pool's private branch in length, the selfish miners reveal blocks from their private chain to the public.
I don't understand how this scenario is beneficial. If the selfish miner doesn't have 51% of the hashing power, they can discover more blocks than the public chain only if they are very lucky. They don't know in advance that they will be that lucky. Withholding blocks in hope of this luck means putting these blocks at a very high risk of being discarded and losing the rewards. Why would they do that, exactly? If they get lucky, they get the rewards of their chain, and discard the rewards of the other miners. If they don't, they lose a lot of rewards. On the other hand, if they just publish the blocks they find, they're almost guaranteed to get the rewards. Why take the risk? It sounds like putting your own rewards at risk just to put others' rewards at risk. It looks like the risks even out.
> The goal is to be the first (or very close to the first), because it makes it much more likely that your chain will not be abandoned.
Yes, if there are blocks that are found at almost the same time. But that's not the situation discussed here.
In other situations, being first doesn't matter. If a miner finds a block before you do, then you just start mining on top of their block. You haven't lost anything.
> Yes, if there are blocks that are found at almost the same time. But that's not the situation discussed here.
It VERY MUCH is.
Of course if you take another scenario that doesn't make sense, then it doesn't make sense :-).
> They don't know in advance that they will be that lucky.
Whenever you find a block, you know you are one of the first to find it. It's obvious because nobody else has published a block. So you know you are lucky right now. You can decide to wait 1, 2, 5, X seconds before you reveal your block and start mining the new block in the meantime.
Maybe you just mine for 5 seconds before revealing the block, and that's the winning strategy. Maybe you wait until someone else publishes their block and you immediately reveal yours, ending up with two competing chains but knowing that you had a headstart with yours.
The detail of whether or not this is profitable, and how exactly you should do it (Wait X seconds? Wait until someone publishes a block?) is statistics and game theory ("What if the others are also withholding their blocks now? What is their strategy?"). The whole question is whether or not there is a practical, profitable strategy doing that.
But yesterday's jackpot is still running, here. If you find a block on the public chain while the other miner kept their block secret, your block becomes the main chain. If they publish their block after you, both blocks compete for the head, but it's usually the first published one that wins.
There is an advantage because occasionally you find the second block while the first block is still secret, then you release the two blocks in quick succession. That’s the edge.
What advantage does it provide vs not withholding? If you don't keep your first block secret and find a 2nd block, you get the same rewards.
On the other hand, if someone finds a block while you're keeping yours secret, it's very likely you'll lose the reward of your block.
So, you get a chance to discard the block of another miner, but you have to put your own block at risk of being discarded. Maybe there's a gain here, but it's not clear.
You can determine statistically whether you have found a block relatively early, and conversely whether other miners are unlikely to find one soon.
So you can get a head start on the next block from the likely new head block you've found.
It only works on average of course, you might be the one wasting resources if someone else published a block while you're withholding yours, but the trick is for you to gain an edge on average.
Now what happens if everyone is doing that calculation? That's where you need to do the game theory analysis (which I haven't and don't claim to understand).
> You can determine statistically whether you have found a block relatively early, and conversely whether other miners are unlikely to find one soon.
Finding a block relatively early doesn't affect the odds of others finding a block soon. The odds are always the same, each hash is an independent event.
I don't see why withholding would get you an edge on average. If the others find a block while you're withholding, you lose your reward. If you find another block before them, you get the rewards of 2 blocks, exactly like if the same happened but you didn't withhold.
The only way for you to have an advantage is if you find a 2nd block at the same time as another one finds one on the other chain. You can then publish a height of 2 vs a height of 1, so you win. But to do that you have to first put your first block reward at high risk by withholding it. I don't think the odds are in your favor here.
Yeah, I was thinking about this wrong. I don't think it works.
Edit: I think the strategy does work, but a little differently: if you withhold a block and someone else finds one while you do so, you can still publish yours and win a race with a certain probability, i.e. the expected loss is not as high as one might think.
Then, if you do that and if you have enough hash power, you can end up mining a private chain ahead of the public one often enough, so that the loss you take is less than the loss others take through the hash power they are wasting because of you doing this.
