A Knowledge-Based Analysis of the Blockchain Protocol
This work addresses the need for formal knowledge analysis in blockchain systems, which is crucial for applications such as secure contracts, but it is incremental as it builds on existing concepts of common knowledge.
The paper tackles the problem of understanding the knowledge guarantees provided by blockchain protocols for applications like contract signing, by characterizing agents' knowledge using a variant of common knowledge that accounts for dynamic participation, potential deviations, and probabilistic guarantees, and shows this suffices for some scenarios but not others.
At the heart of the Bitcoin is a blockchain protocol, a protocol for achieving consensus on a public ledger that records bitcoin transactions. To the extent that a blockchain protocol is used for applications such as contract signing and making certain transactions (such as house sales) public, we need to understand what guarantees the protocol gives us in terms of agents' knowledge. Here, we provide a complete characterization of agent's knowledge when running a blockchain protocol using a variant of common knowledge that takes into account the fact that agents can enter and leave the system, it is not known which agents are in fact following the protocol (some agents may want to deviate if they can gain by doing so), and the fact that the guarantees provided by blockchain protocols are probabilistic. We then consider some scenarios involving contracts and show that this level of knowledge suffices for some scenarios, but not others.