Less is More: Fairness in Wide-Area Proof-of-Work Blockchain Networks

Abstract: Blockchain is rapidly emerging as an important class of network application, with a unique set of trust, security and transparency properties. In a blockchain system, participants record and update the `server-side' state of an application as blocks of a replicated, immutable ledger using a consensus protocol over the Internet. Mining blocks has become lucrative in recent years; e.g., a miner receives over USD 200,000 per mined block in Bitcoin today. A key factor affecting mining rewards, is the latency of broadcasting blocks over the network. In this paper, we consider the problem of topology design for optimizing mining rewards in a wide-area blockchain network that uses a Proof-of-Work protocol for consensus. Contrary to general wisdom that a faster network is always better for miners, we show a counter intuitive result where a slower network is actually beneficial to some miners. This is because competing miners must choose neighbors that not only decrease their own latency to others, but also ensure that the latency between other miners do not decrease because of itself. We formalize this problem, and provide both theoretical analysis and experimental results to support our claim.