Theoretical Bitcoin Attacks with less than Half of the Computational Power (draft)

Understand

A widespread security claim of the Bitcoin system, presented in the original Bitcoin white-paper, states that the security of the system is guaranteed as long as there is no attacker in possession of half or more of the total computational power used to maintain the system.

• This claim, however, is proved based on theoretically flawed assumptions.
• In the paper we analyze two kinds of attacks based on two theoretical flaws: the Block Discarding Attack and the Difficulty Raising Attack.
• We argue that the current theoretical limit of attacker's fraction of total computational power essential for the security of the system is in a sense not $\frac{1}{2}$ but a bit less than $\frac{1}{4}$, and outline proposals for protocol change that can raise this limit to be as close to $\frac{1}{2}$ as we want.