Basic Properties of the Blockchain

Abstract

As the first decentralized cryptocurrency, Bitcoin [1] has ignited much excitement, not only for its novel realization of a central bank-free financial instrument, but also as an alternative approach to classical distributed computing problems, such as reaching agreement distributedly in the presence of misbehaving parties, as well as to numerous other applications-contracts, reputation systems, name services, etc. The soundness and security of these applications, however, hinges on the thorough understanding of the fundamental properties of its underlying blockchain data structure, which parties ("miners") maintain and try to extend by generating "proofs of work" (POW, aka "cryptographic puzzle"). In this talk we follow the approach introduced in [2], formulating such fundamental properties of the blockchain, and then showing how applications such as consensus and a robust public transaction ledger can be built ``on top'' of them. The properties are as follows, assuming the adversary's hashing power (our analysis holds against arbitrary attacks) is strictly less than ½ and high network synchrony: