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Tailstorm: A Secure and Fair Blockchain for Cash Transactions

Authors Patrik Keller, Ben Glickenhaus, George Bissias, Gregory Griffith

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Patrik Keller
  • Universität Innsbruck, Austria
Ben Glickenhaus
  • University of Massachusetts Amherst, MA, USA
George Bissias
  • University of Massachusetts Amherst, MA, USA
Gregory Griffith
  • Bitcoin Unlimited

Funding

  • Bissias, George: Bitcoin Unlimited

Acknowledgements

We wish to thank Bitcoin Unlimited for their financial and technical support as well as Michael Fröwis for his review of this work and for the helpful suggestions he provided.

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Patrik Keller, Ben Glickenhaus, George Bissias, and Gregory Griffith. Tailstorm: A Secure and Fair Blockchain for Cash Transactions. In 5th Conference on Advances in Financial Technologies (AFT 2023). Leibniz International Proceedings in Informatics (LIPIcs), Volume 282, pp. 6:1-6:26, Schloss Dagstuhl – Leibniz-Zentrum für Informatik (2023)
https://doi.org/10.4230/LIPIcs.AFT.2023.6

Abstract

Proof-of-work (PoW) cryptocurrencies rely on a balance of security and fairness in order to maintain a sustainable ecosystem of miners and users. Users demand fast and consistent transaction confirmation, and in exchange drive the adoption and valuation of the cryptocurrency. Miners provide the confirmations, however, they primarily seek rewards. In unfair systems, miners can amplify their rewards by consolidating mining power. Centralization however, undermines the security guarantees of the system and might discourage users. In this paper we present Tailstorm, a cryptocurrency that strikes this balance. Tailstorm merges multiple recent protocol improvements addressing security, confirmation latency, and throughput with a novel incentive mechanism improving fairness. We implement a parallel proof-of-work consensus mechanism with k PoWs per block to obtain state-of-the-art consistency guarantees [Patrik Keller and Rainer Böhme, 2022]. Inspired by Bobtail [George Bissias and Brian Neil Levine, 2020] and Storm [awemany, 2019], we structure the individual PoWs in a tree which, by including a list of transactions with each PoW, reduces confirmation latency and improves throughput. Our proposed incentive mechanism discounts rewards based on the depth of this tree. Thereby, it effectively punishes information withholding, the core attack strategy used to reap an unfair share of rewards. We back our claims with a comprehensive analysis. We present a generic system model which allows us to specify Bitcoin, B_k [Patrik Keller and Rainer Böhme, 2022], and Tailstorm from a joint set of assumptions. We provide an analytical bound for the fairness of Tailstorm and Bitcoin in honest networks and we confirm the results through simulation. We evaluate the effectiveness of dishonest behaviour through reinforcement learning. Our attack search reproduces known optimal strategies against Bitcoin, uncovers new ones against B_k, and confirms that Tailstorm’s reward discounting makes it more resilient to incentive layer attacks. Our results are reproducible with the material provided online [Keller and Glickenhaus, 2023]. Lastly, we have implemented a prototype of the Tailstorm cryptocurrency as a fork of Bitcoin Cash. The client software is ready for testnet deployment and we also publish its source online [Griffith and Bissias, 2023].

Subject Classification

ACM Subject Classification
  • Security and privacy → Distributed systems security
Keywords
  • Proof-of-Work
  • Blockchain
  • Cryptocurrency
  • Mining Rewards
  • Fairness

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References

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