Difficulty control for blockchain-based consensus systems

Crypto-currencies like Bitcoin have recently attracted a lot of interest. A crucial ingredient into such systems is the “mining” of a Nakamoto blockchain. We model mining as a Poisson process with time-dependent intensity and use this model to derive predictions about block times for various hash-ra...

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Published inPeer-to-peer networking and applications Vol. 9; no. 2; pp. 397 - 413
Main Author Kraft, Daniel
Format Journal Article
LanguageEnglish
Published New York Springer US 01.03.2016
Springer Nature B.V
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Abstract Crypto-currencies like Bitcoin have recently attracted a lot of interest. A crucial ingredient into such systems is the “mining” of a Nakamoto blockchain. We model mining as a Poisson process with time-dependent intensity and use this model to derive predictions about block times for various hash-rate scenarios (exponentially rising hash rate being the most important). We also analyse Bitcoin’s method to update the “network difficulty” as a mechanism to keep block times stable. Since it yields systematically too fast blocks for exponential hash-rate growth, we propose a new method to update difficulty. Our proposed method performs much better at ensuring stable average block times over longer periods of time, which we verify both in simulations of artificial growth scenarios and with real-world data. Besides Bitcoin itself, this has practical benefits particularly for systems like Namecoin. It can be used to make name expiration times more predictable, preventing accidental loss of names.
AbstractList Crypto-currencies like Bitcoin have recently attracted a lot of interest. A crucial ingredient into such systems is the "mining" of a Nakamoto blockchain. We model mining as a Poisson process with time-dependent intensity and use this model to derive predictions about block times for various hash-rate scenarios (exponentially rising hash rate being the most important). We also analyse Bitcoin's method to update the "network difficulty" as a mechanism to keep block times stable. Since it yields systematically too fast blocks for exponential hash-rate growth, we propose a new method to update difficulty. Our proposed method performs much better at ensuring stable average block times over longer periods of time, which we verify both in simulations of artificial growth scenarios and with real-world data. Besides Bitcoin itself, this has practical benefits particularly for systems like Namecoin. It can be used to make name expiration times more predictable, preventing accidental loss of names.
Author Kraft, Daniel
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Keywords Namecoin
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  doi: 10.1109/P2P.2013.6688704
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– volume-title: NIST handbook of mathematical functions
  year: 2010
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  doi: 10.1007/978-1-4757-0602-4_18
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  doi: 10.18637/jss.v005.i08
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Snippet Crypto-currencies like Bitcoin have recently attracted a lot of interest. A crucial ingredient into such systems is the “mining” of a Nakamoto blockchain. We...
Crypto-currencies like Bitcoin have recently attracted a lot of interest. A crucial ingredient into such systems is the "mining" of a Nakamoto blockchain. We...
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SubjectTerms Blocking
Communications Engineering
Computer Communication Networks
Control systems
Currencies
Digital currencies
Engineering
Information Systems and Communication Service
Mathematical models
Mining
Names
Networks
Peer to peer computing
Signal,Image and Speech Processing
Simulation
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Title Difficulty control for blockchain-based consensus systems
URI https://link.springer.com/article/10.1007/s12083-015-0347-x
https://www.proquest.com/docview/1762634346
https://www.proquest.com/docview/1793238730
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