the attacker does not gain any direct benefit by performing the attack
Hi guys,
It is NOT true that the attacker cannot benefit from such an attack!
In our paper published 6 months ago we explain how to make block withholding attacks PROFITABLE.
It is very very simple and gains can be quite substantial in practice, see:
http://arxiv.org/abs/1402.1718If I read correctly, in your paper, you don't explain how withholding blocks is profitable. You explain how it makes miners from the attacked pool (including the withholder) gain less (than if there was no withholding). So, by having half the hashpower mining elsewhere, the withholder gains are bigger than the other miners (from the attacked pool) -- but they are less than if there was no block withholding. I don't think this is PROFIT in the sense of gaining more. It's just "more than the others from the pool".
Where withholding blocks could be profitable is for pool operators. Making a competitor pool look less interesting with bad luck may make miners switch/choose another pool and the chosen pool operator would then benefit from the better pool fees/income. Thinking out loud. It is not mathematics, it is just manipulation of miner opinions and decisions by making a pool look bad.
Kexkey