Paper 2016/871

Blockchain-Free Cryptocurrencies: A Framework for Truly Decentralised Fast Transactions

Xavier Boyen, Christopher Carr, and Thomas Haines

Abstract

The "blockchain" distributed ledger pioneered by Bitcoin is effective at preventing double-spending, but inherently attracts (1) "user cartels" and (2) incompressible delays, as a result of linear verification and a winner-takes-all incentive lottery. We propose to forgo the blocks and chain entirely, and build a truly distributed ledger system based on a lean graph of cross-verifying transactions, which now become the main and only objects in the system. A fully distributed consensus mechanism, based on progressive proofs of work with predictable incentives, ensures rapid convergence even across a large network of unequal participants, who all get rewards working at their own pace. Graph-based affirmation fosters snappy response through automatic scaling, while application-agnostic design supports all modern cryptocurrency features such as multiple denominations, swaps, securitisation, scripting, smart contracts, etc. We prove theoretically, and experimentally verify, our proposal to show it achieves a crucial "convergence" property, meaning that any valid transaction entering the system will quickly become enshrined into the ancestry upon which all future transactions will rest.