However, punitive forking doesn’t work unless Gloria has 51% of the hashpower, which is extremely difficult to achieve in reality. Is there another way? Unfortunately for me, Yeah…
There is a strategy called feather forking, in which Gloria announces that she will attempt to fork if she sees a block with one of my transactions. But she will give up after a while.
This is in contrast to punitive forking, since that only works if a longer chain is guaranteed by the fork. In short, Gloria gives up after a block with my transactions has k confirmations, where k is any number. In the diagram, Gloria sees a block containing one of my transactions and attempts to fork.
However, I get 3 confirmations, so she gives up trying to continue her fork.
Let’s look at a little bit of math. Let q be the proportion of mining power that Gloria has. Let k equal one, so that Gloria gives up after one confirmation on my block. This means that the chance of successfully orphaning my block is q squared, since Gloria has to compete with each confirmation. If q is 20%, then gloria has a 4% chance to orphan my block, which isn’t that great.
However, other miners are now aware that their block has a q^2, or 4% chance of being orphaned.
They now have to decide whether they should include my transaction in their block. The expected value of including my transaction is the chance that my block is included times the block reward, plus the transaction fee that I pay. The expected value of not including my transaction is simply just the block reward, since all miners would be working on that chain.
Therefore, looking at the math, unless I pay at least q^2 times the block reward in transaction fees, other miners will mine on the malicious chain. As of April 17th 2018, that would be a $4000 minimum tx fee, which is incredibly limiting. It’s very likely that I won’t be able to afford those transaction costs, so I won’t be even be able to send my transactions through. Thus, Gloria has succeeded in censoring my transactions with only 20% of the total hashrate.