Bitcoin and Cryptocurrency Technologies

to provide an effective solution, the details of the protocol are quite complicated and it has yet to be
deployed successfully.
A final countermeasure that may exist is that, as we’ve seen for traditional mining schemes, miners
may simply not have a strong incentive to attack because this would damage the system and
undermine their stake, even if the attack is successful.
Other drawbacks of virtual mining.​Two other drawbacks are worth quickly mentioning. The first is
that some forms of virtual mining, even in the absence of stake‐grinding, might make some types of
attacks easier because it is possible to “save up” for a burst of mining power. For example, a large
amount of coin‐stake can be pooled to enable a dramatic surge of mining to, perhaps, introduce a
fork. This is possible even if a system like Slasher is used to discourage mining on two chains at once.
To discourage this type of attack, Peercoin limits the age parameter to 90 days when computing
coin‐age.
A second issue is that if a miner in a virtual mining system obtains 51% of the available stake, they can
maintain it forever by only mining on top of their own blocks, essentially taking control of the block
chain. Even if new stake emerges from mining rewards and transaction fees, the 51% miner will obtain
this new stake and their share of the total stake will slowly approach 100%. In traditional mining, even
if a 51% miner exists it is always possible that some new miner will emerge with more mining
equipment and energy and reduce the majority miner. With virtual mining, it is much more difficult to
avoid this problem.
Can virtual mining actually work?​Virtual mining remains somewhat controversial in the mainstream
Bitcoin community. There is an argument that security fundamentally requires burning real resources,
requiring real computational hardware and expending real electrical power in order to find puzzle
solutions. If this argument is believed, then the apparent waste of the proof of work system can be
interpreted as the cost of the security that you get. But this argument hasn’t been proven, just as the
security of virtual mining hasn’t been proven.
In summary, there are numerous things one might want to change about Bitcoin’s mining puzzle, and
this has been an area of furious research and innovation. So far, however, none of the alternatives
seems to have both demonstrated theoretical soundness and found practical adoption. For example,
even though scrypt has been a popular choice in altcoins, it hasn’t actually achieved ASIC resistance,
and its usefulness is unclear. It is entirely possible that alternative mining puzzles will find more
success in the future. After all, Bitcoin itself came after decades of failed attempts to create a
cryptocurrency and managed to hit the sweet spot between principled design and practical trade‐offs.
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