Longest-chain Attacks: Difficulty Adjustment and Timestamp Verifiability

TL;DR

This paper analyzes how the verifiability of timestamps affects the difficulty of longest-chain attacks in Proof-of-Work blockchains, offering insights for designing more secure systems.

Contribution

It characterizes optimal adversarial strategies under different timestamp verifiability scenarios and highlights the impact of difficulty adjustment rules on blockchain security.

Findings

Verifiable timestamps make longest-chain attacks more difficult.

Frequent difficulty adjustments increase vulnerability to attacks.

Timestamp verifiability is crucial for blockchain security design.

Abstract

We study an adversary who attacks a Proof-of-Work (POW) blockchain by selfishly constructing an alternative longest chain. We characterize optimal strategies employed by the adversary when a difficulty adjustment rule al\`a Bitcoin applies. As time (namely the times-tamp specified in each block) in most permissionless POW blockchains is somewhat subjective, we focus on two extreme scenarios: when time is completely verifiable, and when it is completely unverifiable. We conclude that an adversary who faces a difficulty adjustment rule will find a longest-chain attack very challenging when timestamps are verifiable. POW blockchains with frequent difficulty adjustments relative to time reporting flexibility will be substantially more vulnerable to longest-chain attacks. Our main fining provides guidance on the design of difficulty adjustment rules and demonstrates the importance of timestamp verifiability.