Modeling a Double-Spending Detection System for the Bitcoin Network

TL;DR

This paper proposes a model for detecting double-spending in Bitcoin by polling network nodes, analyzing how network topology affects detection efficiency and resource requirements.

Contribution

It introduces a novel detection model using an oracle and explores how different network structures influence the optimal node polling strategy.

Findings

Small-world networks require fewer nodes to poll for effective detection.

Random network topologies enable fast and reliable detection with few polled nodes.

Network structure significantly impacts the efficiency of double-spending detection.

Abstract

The Bitcoin protocol prevents the occurrence of double-spending (DS), i.e. the utilization of the same currency unit more than once. At the same time a DS attack, where more conflicting transactions are generated, might be performed to defraud a user, e.g. a merchant. Therefore, in this work, we propose a model for detecting the presence of conflicting transactions by means of an 'oracle' that polls a subset of nodes of the Bitcoin network. We assume that the latter has a complex structure. So, we investigate the relation between the topology of several complex networks and the optimal amount, and distribution, of a subset of nodes chosen by the oracle for polling. Results show that small-world networks require to poll a smaller amount of nodes than regular networks. In addition, in random topologies, a small number of polled nodes can make a detection system fast and reliable even if the underlying network grows.