Bandwidth-Efficient Transaction Relay for Bitcoin (1905.10518v2)

Abstract: Bitcoin is a top-ranked cryptocurrency that has experienced huge growth and survived numerous attacks. The protocols making up Bitcoin must therefore accommodate the growth of the network and ensure security. Security of the Bitcoin network depends on connectivity between the nodes. Higher connectivity yields better security. In this paper we make two observations: (1) current connectivity in the Bitcoin network is too low for optimal security; (2) at the same time, increasing connectivity will substantially increase the bandwidth used by the transaction dissemination protocol, making it prohibitively expensive to operate a Bitcoin node. Half of the total bandwidth needed to operate a Bitcoin node is currently used to just announce transactions. Unlike block relay, transaction dissemination has received little attention in prior work. We propose a new transaction dissemination protocol, Erlay, that not only reduces the bandwidth consumption by 40% assuming current connectivity, but also keeps the bandwidth use almost constant as the connectivity increases. In contrast, the existing protocol increases the bandwidth consumption linearly with the number of connections. By allowing more connections at a small cost, Erlay improves the security of the Bitcoin network. And, as we demonstrate, Erlay also hardens the network against attacks that attempt to learn the origin node of a transaction. Erlay is currently being investigated by the Bitcoin community for future use with the Bitcoin protocol.

• The paper introduces Erlay, a transaction relay protocol that reduces bandwidth usage by up to 40% while mitigating redundant data flooding.
• The methodology combines low-fanout flooding with efficient set reconciliation using PinSketch, validated through simulations on a 60,000-node network.
• Erlay enables nodes to increase connectivity without excessive bandwidth costs, enhancing Bitcoin’s network scalability, security, and decentralization.

Insightful Overview of "Bandwidth-Efficient Transaction Relay in Bitcoin"

This paper explores the topic of transaction dissemination within the Bitcoin network, highlighting inefficiencies in the current protocol and proposing a novel approach, Erlay, designed to optimize bandwidth usage while maintaining security and decentralization.

Bitcoin's security, which is heavily reliant on the network's connectivity, necessitates that nodes maintain a high number of connections. However, this high connectivity leads to substantial bandwidth consumption due to transaction relay protocols that focus on flooding. The analysis presented shows that up to half of the bandwidth required to operate a Bitcoin node is used just for transaction announcements. Increasing connectivity could therefore make participation prohibitively expensive, with per-node transaction relay bandwidth exceeding 50GB/month under conventional models with increased connections.

To address these challenges, the authors propose Erlay. Erlay is a transaction relay protocol that reduces bandwidth usage by 40% at current connectivity levels and keeps bandwidth almost constant as connectivity grows. The core technique behind Erlay is an interpolation of low-fanout flooding and set reconciliation, thus striking a balance between bandwidth efficiency and propagation delay.

Erlay's innovation lies partly in its use of efficient set reconciliation derived from PinSketch, enabling nodes to compare their transaction sets with minimal overhead. Through empirical evaluation using simulations of a network with 60,000 nodes, discussions highlight Erlay's ability to address the redundancy of traditional relay methods—demonstrating an 84% reduction in bandwidth consumption associated with transaction announcements.

Erlay's contribution is significant, not only in terms of bandwidth savings but also in terms of network security. By allowing nodes to increase connectivity without incurring higher bandwidth costs, Erlay enhances network robustness against attacks seeking to identify the origin of transactions. Public nodes in particular, which are pivotal in sustaining the Bitcoin network, will benefit from reduced strain and improved efficiency, potentially lowering barriers to participation and fostering decentralization.

From a theoretical perspective, Erlay underscores the importance of adopting an integrated approach to network protocols that balances efficiency, security, and decentralization—three critical components that often exist in tension within distributed systems. Practically, Erlay could significantly impact the sustainability and operational efficiency of the Bitcoin network as transaction rates continue to rise.

Future research could extend Erlay's applicability to other blockchain-based systems, especially as transaction rates and network sizes grow. Moreover, the reconciliation-based approach opens avenues for further innovations in the optimization of peer-to-peer networks under varying operational constraints.

In summary, this paper effectively addresses a critical bottleneck in Bitcoin's network operations, paving the way for improvements in both the scalability and security of cryptocurrencies. As the community explores Erlay's integration into the Bitcoin protocol, its potential for broader applicability and further enhancements presents a promising direction for future research in the field.