Evaluating the Impact of Network Latency on the Safety of Blockchain Transactions

Blockchain came to prominence as the distributed ledger underneath Bitcoin, which protects the transaction histories in a fully-connected, peer-to-peer network. For safety against double-spending, a bitcoin transaction is only considered to be unrevokable after it is within a chain of at least six mined blocks on the blockchain-termed "six confirmations" for short. Besides the use for securing financial activity, blockchain technology is now also merged with various emerging applications, including Internet of Things (IoT) and vehicular ad-hoc networks (VANET). However, such emerging applications may have comparatively low Internet connectivity due to incorporating mobile devices, that may range away from network infrastructure. This paper investigates the impact of network latency on blockchain forking behavior and possible violations of the aforementioned six confirmations convention for transaction approval. To speed up our simulations, we simplify the lockchain's data structure, and avoid the extensive computation required in proof-of-work (PoW). Through simulation, we show that the six confirmations convention is sensitive to the peer-to-peer network latency, and also show how quickly it is violated with an easier difficulty of PoW mining. Unsurprisingly, the speed at which all nodes on the blockchain converge is shown to be severely affected by the latency of the underlying peer-to-peer network. It is also shown the extent to which nodes with more frequent Internet connectivity can gain an unfair advantage in terms of proof-ofwork mining rewards. We thus recommend that networks with heterogeneous latency profiles across nodes monitor fairness, and potentially preclude some nodes from being miners.