Decentralization is Vulnerable Under the Gap Game

The blockchain is the core mechanism of Bitcoin, which is mainly enabled by a distributed consensus mechanism. Essentially, in Proof-of-Work-based consensus protocol, the miners generate a series of blocks to realize decentralization practical. Miners receive two types of revenue: block rewards and transaction fees, in which the reward of block drops off as time goes on. Carlsten et al. defined a mining gap and then Tsabary et al. analyzed the gap game exploring how mining gaps form. In this paper, we analyze the other implications of the gap game. First, it is well known that the security of Bitcoin decentralized consensus protocol relies on miners behaving correctly. The security of the blockchain system will be threatened in case of the consensus mechanism is breached. Therefore, we also described how the gap game impacts the decentralization of Bitcoin and the stability of blockchain. Second, to confirm the implication, we discuss what aspects of decentralization can be impacted by the gap game; then we defined a new decentralization model and listed its main features. In the end, we analyze the block reward capacity in the blockchain and consider the impact on the existing two common block reward systems when the gap game was formed.