All right, now that you know my conclusion, let’s see how to get there with data. First, some background.
Let me give very quick overview of Bitcoin in this context. (There are many comprehensive overviews elsewhere.) Bitcoin is an ongoing ledger of transactions of along the lines of “This guy had 5 Bitcoins, and he sent 2 of them to that guy. Now he has 3 Bitcoins.” The transaction ledger is public, which prevents people from sending coins they already sent – the ledger rejects invalid transactions. Everyone on the network has a copy of the ledger. New transactions are appended to the ledger in the form of blocks containing a bunch of transactions. The ledger is formally called the blockchain, because it’s a chain of blocks which contain descriptions of transactions. There’s a bunch of cryptography which prevents people from making transactions involving coins they don’t control, but we don’t care about that for now. What counts here is how to add new blocks to the blockchain.
Anybody can add new blocks, but you don’t want any one person to have full control over this. The process of adding new blocks is called mining because the person who adds a block is currently rewarded with 25 Bitcoins. Each miner puts a valid block together and attempts to append it to the end of the chain. They do this by running a random number generator on their computer which spits out random numbers at a colossal rate, and the first miner whose random number generator spits out an appropriate number is the miner whose block is appended to the chain. Then everybody starts work on the next block, hoping to be the one to win the RNG lottery this time. (The details of this process are a bit involved, but the required output of the RNG is tuned such that a block will be appended about every 10 minutes on average. The RNG involves a cryptographic hash, which is why the number-generation process is called hashing.)
The “selfish miner” attack, proposed by Ittay Eyal and Emin Gun Sirer of Cornell, is a way that a dishonest miner could finesse the protocol and win more blocks than their percentage of the overall hash rate would indicate. In this attack, a miner finds a new block but doesn’t immediately distribute it to the network so everyone can get to work on the next one. Instead, the miner begins work on the block which would follow their unreleased block. If they find the next block in the chain, they keep going. When they see that the rest of the miners have found a block, the selfish miners quickly release all the work they’ve done – which might be several blocks, which means their blocks get added to the chain because in the event of a conflict the longest chain wins. The rest of the miners never had a shot at those previously hidden blocks, so some of their hashing power was wasted. The selfish miners could thus generate blocks disproportionately faster than their percentage of the total hashing power would indicate. If the selfish miners can generate more than one block before the next fair-mined block is found, they always win because they have the longer chain.
Selfish miners can do even better if they can manage to win more of the “ties” where they find the first block but the fair miners post a block before the selfish miners find their second block. If the selfish miners are able to quickly release their single block before the honest miner’s block can propagate through the network, they’ll always be at an advantage relative to the honest miners. This takes some work, because they have to have lots of nodes which can react quicker than honest blocks can propagate. But even if the selfish miners can only get their single blocks accepted half the time, they’ll still come out ahead if they have more than 1/4 of the hashing power. And if fact even if the selfish single blocks never beat the honest blocks in their distribution throughout the network, the selfish miners will still come out ahead if they have more than 1/3 of the total hashing power. A salient question is thus how to detect whether or not such an attack is in progress.