On the Benefits of Compact Blocks in Bitcoin

Abstract

Compact blocks and compact block protocol are a recent addition to the Bitcoin (BTC) data propagation protocol that aims to reduce bandwidth requirements and, possibly, reduce latency as well. In this work we have evaluated improvement of operation of BTC network under a mix of regular and compact block traffic in low-bandwidth mode. We have performed queuing analysis of the BTC network and obtained performance descriptors of block and transaction delivery times as well as forking probability. Although compact block size is more than an order of magnitude smaller than regular block size, improvement of delivery times is within bounds of 0% to 20%. Forking probability shows highest improvement of 25%. However, further analysis shows that compact block protocol requires high transaction traffic in order to prevent transaction pool deficit which causes further interaction among the peers.