Financial Cryptography

FC++ -- Bitcoin Verification Latency -- The Achilles Heel for Time Sensitive Transactions

New paper for circulation by Ken Griffith and myself:

Bitcoin Verification Latency
The Achilles Heel for Time Sensitive Transactions

Abstract.Bitcoin has a high latency for verifying transactions, by design. Averaging around 8 minutes, such high latency does not resonate with the needs of financial traders for speed, and it opens the door for time-based arbitrage weaknesses such as market timing attacks. Although perhaps tractable in some markets such as peer to peer payments, the Achilles heel of latency makes Bitcoin unsuitable for direct trading of financial assets, and ventures seeking to exploit the market for financial assets will need to overcome this burden.

As with the Gresham's paper, developments moved fast on this question, and there are now more ventures looking at the contracts and trading question. For clarification, I am the secondary author, Ken is lead.