Security, Latency, and Throughput of Proof-of-Work Nakamoto Consensus

This paper investigates the fundamental trade-offs between block safety, confirmation latency, and transaction throughput of proof-of-work (PoW) longest-chain fork-choice protocols, also known as PoW Nakamoto consensus. New upper and lower bounds are derived for the probability of block safety violations as a function of honest and adversarial mining rates, a block propagation delay limit, and confirmation latency measured in both time and block depth. The results include the first non-trivial closed-form finite-latency bound applicable across all delays and mining rates up to the ultimate fault tolerance. Notably, the gap between these upper and lower bounds is narrower than previously established bounds for a wide range of parameters relevant to Bitcoin and its derivatives, including Litecoin and Dogecoin, as well as Ethereum Classic. Additionally, the study uncovers a fundamental trade-off between transaction throughput and confirmation latency, ultimately determined by the desired fault tolerance and the rate at which block propagation delay increases with block size.