An Analysis of Transaction Handling in Bitcoin

TL;DR

This paper analyzes Bitcoin's transaction handling to understand and predict transaction confirmation times, block attributes, and miner behaviors, revealing that some models predict block features well but struggle with transaction times and miner identities.

Contribution

It provides a detailed analysis of Bitcoin transaction handling and evaluates the predictability of key transaction and block attributes.

Findings

Models predict block attributes reasonably well

Prediction of transaction confirmation time is challenging

Miner identity prediction is less accurate

Abstract

Bitcoin has become the leading cryptocurrency system, but the limit on its transaction processing capacity has resulted in increased transaction fees and delayed transaction confirmation. As such, it is pertinent to understand and probably predict how transactions are handled by Bitcoin such that a user may adapt the transaction requests and a miner may adjust the block generation strategy and/or the mining pool to join. To this aim, the present paper introduces results from an analysis of transaction handling in Bitcoin. Specifically, the analysis consists of two-part. The first part is an exploratory data analysis revealing key characteristics in Bitcoin transaction handling. The second part is a predictability analysis intended to provide insights on transaction handling such as (i) transaction confirmation time, (ii) block attributes, and (iii) who has created the block. The result shows that some models do reasonably well for (ii), but surprisingly not for (i) or (iii).