A rethink of blockchain consensus, and the security implications

Abstract

This thesis investigates the security challenges of blockchain consensus mechanisms, arguing that sub-stratal to these challenges is the widely adopted mindset of probabilistic finality, which in itself is an inherent and significant vulnerability. Core to this problem is the inability or probabilistic protocols such a Proof of Work and Proof of Stake to provide the necessary deterministic and irreversible transaction settlement that high-integrity systems require. This is primarily due to their use of a “longest chain” rule. This deficiency is immensely amplified on new blockchains, as they do not possess the accumulated economic and computational security of mature networks. New blockchains face a serious “bootstrap security problem” which makes them highly prone to catastrophic 51% attacks. The research methodology follows a multi-stage, systematic approach, beginning with a comprehensive literature review to classify and analyse the existing threat landscape across major consensus protocols. Then a targeted theoretical critique of probabilistic finality is presented next, as is a systematic evidence-based assessment of some of the economic and architectural vulnerabilities of nascent networks. The findings of this analytical work confirm that the security of a blockchain is not static but evolves, and that the initial phase of a network's lifecycle is its most insecure. The main contribution of this thesis is the design and proposal of a novel consensus algorithm called “Erdos” that aims to address these issues directly. Erdos offers a deterministic process for block finalization that involves multiple rounds of vetting and a fair, resource-independent node selection. The design provides a strong fork resistance that stops the risk of 51% attacks and double spending right from the inception and launch of a network. Moreover, it reduces the centralisation pressure that proves to be a problem for nascent protocols. The primary implication of this research is that the future of secure, decentralised systems, particularly for new and emerging applications, necessitates an architectural shift away from probabilistic models towards deterministic, fair, and resilient consensus protocols as exemplified by the Erdos algorithm.