Making Transaction Propagation More Efficient: Deferred Transaction Relay in Bitcoin

Data propagation in the Bitcoin network is inefficient due to its permissionless nature and the lack of multicast/broadcast features. In particular, the number of messages needed to propagate a single transaction is very high which is rather wasteful in terms of bandwidth utilization. In this work we propose a simple modification of Bitcoin software that allows a vast reduction of the number of messages needed for propagating a transaction over the network. The modification consists of deferring the transaction announcements until a certain predefined number of new transactions is collected. We show that the number of messages can be substantially reduced in this manner. The price to pay for this reduction is an increase in transaction propagation delay. However, the tradeoff between the reduction of traffic and transaction delay can be minimized by judicious choice of the threshold number of deferred transactions.