Bobtail: Improved Blockchain Security with Low-Variance Mining

Blockchain systems are designed to produce blocks at a constant average rate. The most popular systems currently employ a Proof of Work (PoW) algorithm as a means of creating these blocks. An unfortunate limitation of all deployed PoW blockchain systems is that the time between blocks has high variance. For example, Bitcoin produces, on average, one block every 10 minutes. However, 5% of the time, Bitcoin's inter-block time is at least 30 minutes. In this paper, we show that high variance is at the root of fundamental attacks on PoW blockchains. We propose an alternative process for PoW-based block discovery that results in an inter-block time with significantly lower variance. Our algorithm, called Bobtail, generalizes the current algorithm, which uses a single PoW sample, to one that incorporates k samples. We show that the variance of inter-block times decreases as k increases. Bobtail significantly thwarts doublespend and selfish mining attacks. For example, for Bitcoin and Ethereum, a doublespending attacker with 35% of the mining power will succeed with 44% probability when the merchant sets up an embargo of 1 block; however, when k >= 40, the probability of success for the same attacker falls to less than 1%. Similarly, for Bitcoin and Ethereum currently, a selfish miner with 45% of the mining power will claim about 71% of blocks; however, when k >= 20, the same miner will find that selfish mining is less successful than honest mining. We also investigate attacks newly made possible by Bobtail and show how they can be defeated. The primary costs of our approach are larger blocks and increased network traffic.