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Research Indicates Blockchain Congestion and Transaction Delays Discourage Malicious Activities
Researchers from Florida Atlantic University and the University of Mississippi have recently released findings suggesting that blockchains featuring “full” blocks — particularly in the presence of a transaction queue — seem to offer an additional layer of defense against malicious actors, money launderers, and potential fraudsters.
Titled “Bitcoin Blocksize, Custodial Security, and Price,” the paper delves into the Mt. Gox incident and other cases where cryptocurrency has been misappropriated from crypto exchanges.
The foundation of the study is based on the idea that those engaged in illegal activities aim to finalize laundering transactions as swiftly as possible.
According to the paper:
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“This investigation is driven by the following intuition: the closer the blocksize is to the limit, the more likely the next transaction will be published on a later block and not the most current one. When these cybercriminals breach a crypto exchange, or ‘close’ a fraudulently operated one, they want to launder the stolen bitcoin quickly.”
The researchers validated their hypothesis by analyzing historical Bitcoin blockchain data alongside a crypto exchange “scam report.” Utilizing a sample period from 2010 to 2021, they developed a “fullness” score for blocks to assess the data.
After establishing a benchmark, the team examined historical data for two specific metrics: the extent to which block fullness influenced the price of Bitcoin (BTC), and how block fullness served as a deterrent for malicious actors.
Their analysis, as stated in the paper, affirmed the team’s hypothesis that “full Bitcoin blocks act as a deterrent to hackers and scammers because they signal congestion.” They also concluded that full blocks “also signal a rise in network security that is captured in price,” thereby confirming their second hypothesis that block fullness impacted Bitcoin price.
According to the team’s findings, block fullness is reported to be 20% lower on the “average day” that experiences a cryptocurrency breach or fraud.
