UTXOs as a Proof of Membership for Byzantine Agreement Based Cryptocurrencies

Abstract

The presence of forks in permissionless blockchains is a recurrent issue. So far this has been handled either a posteriori, through local arbitration rules (e.g., “keep the branch which has required the most computational power”)which are applied once a fork is present in the blockchain, or a priori, via a Byzantine resilient agreement protocol periodically invoked by a committee of well identified and online nodes. In the former case, local arbitration rules guarantee that if they are correctly applied by a majority of users, then with high probability forks are progressively resolved, while in the latter case, the sequence of Byzantine resilient agreements decide on the unique sequence of blocks to be appended to the blockchain. The question we may legitimately ask is the following one: To prevent the period of uncertainty inherent to optimistic-based solutions, are we doomed to rely on the decisions made by a unique committee whose members are already actively involved in the creation of blocks? We negatively answer this question by presenting a solution that combines the best features of optimistic and pessimistic approaches: we leverage the presence of Unspent Transaction Output (UTXO)owners and “the public-key as identities” principle to make UTXO owners (i.e. users)self-organize in small Byzantine resilient committees “around” each new object (i.e., blocks and transactions)to decide on their validity. Validated objects are conflict-free, which guarantees the absence of blockchain forks and allows for fast-payment transactions facility. This is achieved without fearing Sybil attacks and selfish mining attacks. We are not aware of any solutions enjoying such features.