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Validating pairwise transactions on cryptocurrencies: a novel heuristics and network simulation

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Abstract

Bitcoin, along with other cryptocurrencies, has received a lot of attention in the recent past. The popularity of Bitcoin has increased the volume of transactions in an unprecedented way. The time to complete a simple pairwise transaction is determined by proof-of-work which requires a significant time compared to other components of the Bitcoin protocol. In this study, we propose a heuristic for validating pairwise transactions on cryptocurrencies. Our heuristic is based on simulating the participants sending and receiving transactions. We use SHA256 algorithm to enhance our solution for pairwise transactions, creating a local Blockchain of transactions, which has been previously used in the development of various Blockchain systems. We tested in-file and in-memory configurations in our simulations with two million transactions, which respectively took 290.39 and 5.34 s. The peak number for transactions-per-second was 6.88 when using the in-file setting and 374.25 for in-memory setting. From these experiments, we conclude that the number of transactions processed per second improves by increasing the block size as well as avoiding file access. We also implemented a parallel version of our algorithm in order to simulate the sharding technique and ultimately achieve further improvements in performance. In addition, we used Bitcoin simulator to analyze the impact of increasing the block size on the number of forks. Our simulations show that using a secondary relay network, such as FIBRE, to propagate the new blocks significantly reduces the number of forks and consequently the number of stale blocks.

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Acknowledgements

The last three authors acknowledge Natural Sciences and Engineering Research Council (NSERC) Canada for partial financial support for this research through Discovery Grants. The first and second authors acknowledge the GETS funding from Faculty of Graduate Studies and Faculty of Science respectively. The first two authors also acknowledge the International Graduate Student Scholarship from the Faculty of Graduate Studies, University of Manitoba.

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Authors and Affiliations

  1. Department of Computer Science, University of Manitoba, Winnipeg, MB, Canada

    Saulo dos Santos, Muskan Vinayak, Ruppa K. Thulasiram, Parimala Thulasiraman & Shahin Kamali

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  1. Saulo dos Santos
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  2. Muskan Vinayak
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  3. Ruppa K. Thulasiram
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  4. Parimala Thulasiraman
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Correspondence to Ruppa K. Thulasiram.

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dos Santos, S., Vinayak, M., Thulasiram, R.K. et al. Validating pairwise transactions on cryptocurrencies: a novel heuristics and network simulation. J BANK FINANC TECHNOL 3, 71–81 (2019). https://doi.org/10.1007/s42786-018-00003-5

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  • DOI: https://doi.org/10.1007/s42786-018-00003-5

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