Abstract
While current Bitcoin literature mainly focuses on miner behaviors, little has been done to analyze user participation. Because Bitcoins users do not benefit from any incentive, their participation in the system is conditional upon system ability to provide a transactional service at a reasonable cost and acceptable quality. A recent observed trend on a growing number of unconfirmed transactions seems, however, to substantiate that Bitcoin is facing service degradation. The objective of this paper is to shed some light on user participation in Bitcoin against a notion of system fairness, through a utility-based approach. We first introduce fairness to quantify the satisfaction degree of participants (both users and miners) with respect to their justified expectations over time. We then characterize user strategies, deriving the necessary condition for fairness, and we show Bitcoin limitations in delivering it. The utility-based model allows to finally draw conclusions on possible improvements for fairness to promote user participation.
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Notes
- 1.
Technically the miners can create empty blocks and get block rewards. But this is not the purpose of blockchain systems.
- 2.
This description is based on the Nakamoto paper [13], the Bitcoin source code (https://github.com/bitcoin/bitcoin), bitcoin.org (https://bitcoin.org/) and the Bitcoin StackExchange forum (https://bitcoin.stackexchange.com/).
- 3.
https://bitcoin.stackexchange.com/questions/53938/how-does-one-node-connect-to-other-nodes, last access 30 May 2017.
- 4.
Hashing power is proportional to computational power and nodes may change this power by time.
- 5.
Any transaction fees collected by the miner are also sent in this transaction.
- 6.
Note to remember is that the coins in a coinbase transaction cannot be spent until they have received 100 confirmations in the blockchain. All things being equal, 100 confirmations should equate to roughly 16 h and 40 min.
- 7.
The current maximum block size in Bitcoin is 1 MB. See https://bitcoin.org/en/glossary/block-size-limit, last access on 18 July 2017.
- 8.
Average block size for Bitcoin is given in https://blockchain.info/charts/avg-block-size, last access on 18 July 2017.
- 9.
Technically speaking this means to consider P(f) modeled as a stationary process, and the blockchain system as an ergodic dynamical system [4].
- 10.
For simplicity, it is assumed that the sizes of both \(Tx_1\) and \(Tx_2\) are equal to the maximum block size.
- 11.
The principle of insufficient reason prescribes that if one has no reason to think that one state of the world is more probable than another, then all state should be assigned equal probability [16].
- 12.
This is the same situation as in the Saint Petersburg Paradox [19].
- 13.
In the Bitcoin protocol blocks have fixed size (see Sect. 3.5).
- 14.
Such device hash rate is 14TH/s, which means \(14e12*36000\) attempts to solve the PoW in a round (10 min in average).
- 15.
During the submission process of this paper (August 2017), the Bitcoin (BTC) protocol, which has 1 MB of block size, has been hard forked as the Bitcoin Cash (BCC) protocol, which has 8 MB of block size. However, it is early to conclude if BCC is better than BTC for the moment.
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Gürcan, Ö., Del Pozzo, A., Tucci-Piergiovanni, S. (2017). On the Bitcoin Limitations to Deliver Fairness to Users. In: Panetto, H., et al. On the Move to Meaningful Internet Systems. OTM 2017 Conferences. OTM 2017. Lecture Notes in Computer Science(), vol 10573. Springer, Cham. https://doi.org/10.1007/978-3-319-69462-7_37
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