Larger-scale Nakamoto-style Blockchains Don't Necessarily Offer Better Security (2404.09895v1)

Abstract: Extensive research on Nakamoto-style consensus protocols has shown that network delays degrade the security of these protocols. Established results indicate that, perhaps surprisingly, maximal security is achieved when the network is as small as two nodes due to increased delays in larger networks. This contradicts the very foundation of blockchains, namely that decentralization improves security. In this paper, we take a closer look at how the network scale affects security of Nakamoto-style blockchains. We argue that a crucial aspect has been neglected in existing security models: the larger the network, the harder it is for an attacker to control a significant amount of power. To this end, we introduce a probabilistic corruption model to express the increasing difficulty for an attacker to corrupt resources in larger networks. Based on our model, we analyze the impact of the number of nodes on the (maximum) network delay and the fraction of adversarial power. In particular, we show that (1) increasing the number of nodes eventually violates security, but (2) relying on a small number of nodes does not provide decent security provisions either. We then validate our analysis by means of an empirical evaluation emulating hundreds of thousands of nodes in deployments such as Bitcoin, Monero, Cardano, and Ethereum Classic. Based on our empirical analysis, we concretely analyze the impact of various real-world parameters and configurations on the consistency bounds in existing deployments and on the adversarial power that can be tolerated while providing security. As far as we are aware, this is the first work that analytically and empirically explores the real-world tradeoffs achieved by current popular Nakamoto-style deployments.