Double-spending threat ‘unrealistic’ says Bank of Canada
Canada’s central bank published this weekend a study that examines the so-called “incentive compatibility” of blockchain and posed the question: what scope for dishonest behaviour in a system where the users are responsible for the security of the system itself?
The study focused on the proof-of-work protocol for blockchain, used by many of the top cryptocurrency networks, including Bitcoin, and the potential for cheating the system by “dishonest miners”.
Double spending is one of the most immediate concerns. This is where a miner tampers with ownership records in order to defraud their counterparties.
Deep pockets required
The authors of the report, however, said that for a dishonest miner to succeed, he must continually win the race to update the blockchain against group of honest miners and keep his results secret.
This would require the dishonest miner to have extremely deep pockets the study concludes as the cost of launching his dishonest enterprise would be prohibitively expensive.
“These assumptions tend to be unrealistic and, in practice, users have little economic incentives to launch such an attack, especially when the computational investment by other miners is large,” the report said.