[Paper Review] A PoW-less Bitcoin with Certified Byzantine Consensus

Marco Benedetti, Francesco De Sclavis+5 more|arXiv (Cornell University)|Jul 14, 2022

Blockchain Technology Applications and Security4 citations

TL;DR

This paper proposes a permissioned, PoW-less Bitcoin variant using a certified Byzantine fault-tolerant (BFT) consensus protocol combined with a revised FROST threshold signature scheme, enabling deterministic finality and strong fault tolerance in a trusted validator federation. The system retains Bitcoin's core cryptography and data structures while replacing Proof-of-Work with a secure, efficient, and dynamic consensus mechanism suitable for CBDCs and enterprise blockchains.

ABSTRACT

Distributed Ledger Technologies (DLTs), when managed by a few trusted validators, require most but not all of the machinery available in public DLTs. In this work, we explore one possible way to profit from this state of affairs. We devise a combination of a modified Practical Byzantine Fault Tolerant (PBFT) protocol and a revised Flexible Round-Optimized Schnorr Threshold Signatures (FROST) scheme, and then we inject the resulting proof-of-authority consensus algorithm into Bitcoin (chosen for the reliability, openness, and liveliness it brings in), replacing its PoW machinery. The combined protocol may operate as a modern, safe foundation for digital payment systems and Central Bank Digital Currencies (CBDC).

Motivation & Objective

• To explore whether Bitcoin’s technological stack can be repurposed in a permissioned, trusted validator setting without Proof-of-Work.
• To address the limitations of PoW in centralized or permissioned environments, where resource-based consensus is both unnecessary and insecure.
• To design a secure, efficient, and dynamically reconfigurable consensus protocol that preserves Bitcoin’s reliability and openness while enabling deterministic finality.
• To evaluate the feasibility of using a modified PBFT and FROST threshold signatures as a foundation for a modern, safe, and scalable digital payment system or CBDC.

Proposed method

• Replacing Bitcoin’s Proof-of-Work consensus with a Proof-of-Authority (PoA) model based on a trusted federation of validators.
• Integrating a modified Practical Byzantine Fault Tolerance (PBFT) protocol to ensure fault tolerance and Byzantine resilience under up to F failures in a network of N validators.
• Employing a revised Flexible Round-Optimized Schnorr Threshold Signature (FROST) scheme to aggregate block signatures, preserving quorum confidentiality and enabling dynamic key management.
• Using cryptographic sortition via Verifiable Random Functions (VRF) to rotate leadership and ensure fairness, preventing censorship by a Byzantine primary.
• Representing voting rights as non-fungible tokens (NFTs) on the chain to enable dynamic reconfiguration of the validator set without blockchain reset.
• Designing a second-layer Payment Channel Network inspired by Lightning, tailored for permissioned settings to improve scalability and privacy.

Experimental results

Research questions

• RQ1 Can Bitcoin’s core cryptographic and data structure stack be retained while removing its Proof-of-Work consensus mechanism in a permissioned, trusted validator setting?
• RQ2 How can a Byzantine fault-tolerant consensus protocol be efficiently combined with threshold signatures to ensure both security and performance in a permissioned blockchain?
• RQ3 What mechanisms enable dynamic reconfiguration of the validator set without requiring a blockchain reset or compromising security?
• RQ4 How can fairness and censorship resistance be achieved in a BFT-based blockchain with a rotating primary leader?
• RQ5 To what extent can the resulting system serve as a viable, secure, and efficient foundation for Central Bank Digital Currencies (CBDCs)?

Key findings

• The proposed system achieves deterministic finality through a certified Byzantine consensus protocol, ensuring safety and liveness even under Byzantine failures.
• The integration of a revised FROST threshold signature scheme enables secure, confidential aggregation of block signatures, preserving the privacy of the validator quorum.
• Dynamic reconfiguration of the validator set is supported via NFT-based representation of voting rights, allowing key updates, member additions, and removals without blockchain reset.
• Fairness is improved by rotating the primary leader using Verifiable Random Functions (VRF), preventing a single Byzantine primary from censoring transactions.
• The system inherits Bitcoin’s robust cryptography and data structures, enabling a secure, open, and extensible foundation for permissioned blockchains and CBDCs.
• The approach demonstrates technical feasibility of a PoW-less Bitcoin variant that maintains Bitcoin’s reliability and openness while being suitable for regulated, high-availability financial systems.