A Hashing Power Allocation Game with and without Risk-free Asset

Cheng Yukun (), Du Donglei () and Han Qiaoming ()
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Cheng Yukun: School of Business, Suzhou University of Science and Technology, Suzhou215009, China
Du Donglei: Faculty of Management, University of New Brunswick, NB Canada, FrederictonE3B 9Y2, Canada
Han Qiaoming: School of Economics & Management, Nanjing Tech University, Nanjing211800, China

Journal of Systems Science and Information, 2021, vol. 9, issue 3, 255-265

Abstract: Miners in various blockchain-backed cryptocurrency networks compete to maintain the validity of the underlying distributed ledgers to earn the bootstrapped cryptocurrencies. With limited hashing power, each miner needs to decide how to allocate their resource to different cryptocurrencies so as to achieve the best overall payoff. Together all the miners form a hashing power allocation game. We consider two settings of the game, depending on whether each miner can allocate their fund to a risk-free asset or not. We show that this game admits unique pure Nash equilibrium in closed-form for both settings.

Keywords: game and Nash equilibrium; blockchain; cryptocurrency; mining; risk-neutral; risk-averse (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:bpj:jossai:v:9:y:2021:i:3:p:255-265:n:7

DOI: 10.21078/JSSI-2021-255-11

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