Title: Bobtail: A Proof-of-Work Target that Minimizes Blockchain Mining Variance (Draft),
Abstract: 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. Bitcoin produces, on average, one block every
10 minutes. An unfortunate limitation of all deployed PoW blockchain systems is
that the time between blocks has high variance. For example, 5% of the time,
Bitcoin's inter-block time is at least 40 minutes. This variance impedes the
consistent flow of validated transactions through the system. 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 by comparing the mean of the k
lowest order statistics to a target. We show that the variance of inter-block
times decreases as k increases. If our approach were applied to Bitcoin, about
80% of blocks would be found within 7 to 12 minutes, and nearly every block
would be found within 5 to 18 minutes; the average inter-block time would
remain at 10 minutes. Further, we show that low-variance mining significantly
thwarts doublespend and selfish mining attacks. For Bitcoin and Ethereum
currently (k=1), an attacker with 40% of the mining power will succeed with 30%
probability when the merchant sets up an embargo of 8 blocks; however, when
k>=20, the probability of success falls to less than 1%. Similarly, for Bitcoin
and Ethereum currently, a selfish miner with 40% of the mining power will claim
about 66% of blocks; however, when k>=5, the same miner will find that selfish
mining is less successful than honest mining. The cost of our approach is a
larger block header.