An Analysis of Acceptance Policies For Blockchain Transactions

The standard acceptance policy for a cryptocurrency transaction at most exchanges is to wait until the transaction is placed in the blockchain and followed by a certain number of blocks. However, as noted by Sompolinsky and Zohar [16], the amount of time for blocks to arrive should also be taken into account as it affects the probability of double spending. Specifically, they propose a dynamic policy for transaction acceptance that depends on both the number of confirmations and the amount of time since transaction broadcast. In this work we study the implications of using such a policy compared with the standard option that ignores block timing information. Using an exact expression for the probability of double spend, via numerical results, we analyze time to transaction acceptance (performance) as well as the time and cost to perform a double spend attack (security). We show that while expected time required for transaction acceptance is improved using a dynamic policy, the time and cost to perform a double spend attack for a particular transaction is reduced.