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Bitcoin selection rule and foundational game theoretic representation of mining competition

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  • A. Mantovi

Abstract

The Bitcoin selection rule shapes the basic mining (rent-seeking) competition, whose unique Nash equilibrium has been thoroughly investigated in terms of best responses to the overall scale of activity and entry thresholds. It is the aim of the present contribution to deepen such game theoretic aspects of Proof-of-Work and provide a unifying perspective on approaches employing absolute and relative levels of activity, and envision a ‘map’ of strategic space that may frame and cross-fertilize more realistic refinements of mining competition and blockchain phenomenology. The additive aggragation property of the selection rule has pivotal implications for thorough investigations of best response dynamics. Potential lines of progress are briefly sketched.

Suggested Citation

  • A. Mantovi, 2021. "Bitcoin selection rule and foundational game theoretic representation of mining competition," Economics Department Working Papers 2021-EP02, Department of Economics, Parma University (Italy).
    • Handle: RePEc:par:dipeco:2021-ep02
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Blockchain; Proof-of-Work; Rent Seeking; Nash Equilibrium; Additive Aggregation; Best Response Dynamics;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • D82 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Asymmetric and Private Information; Mechanism Design
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

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