Demystifying Incentives in the Consensus Computer

Abstract

Cryptocurrencies like Bitcoin and the more recent Ethereum system allow users to specify scripts in transactions and contracts to support applications beyond simple cash transactions. In this work, we analyze the extent to which these systems can enforce the correct semantics of scripts. We show that when a script execution requires nontrivial computation effort, practical attacks exist which either waste miners' computational resources or lead miners to accept incorrect script results. These attacks drive miners to an ill-fated choice, which we call the verifier's dilemma, whereby rational miners are well-incentivized to accept unvalidated blockchains. We call the framework of computation through a scriptable cryptocurrency a consensus computer and develop a model that captures incentives for verifying computation in it. We propose a resolution to the verifier's dilemma which incentivizes correct execution of certain applications, including outsourced computation, where scripts require minimal time to verify. Finally we discuss two distinct, practical implementations of our consensus computer in real cryptocurrency networks like Ethereum.