Finite blockchain games

Christian Ewerhart

Economics Letters, 2020, vol. 197, issue C

Abstract: This paper studies the dynamic construction of a blockchain by competitive miners. In contrast to the literature, we assume a finite time horizon. Moreover, miners are rewarded for blocks that eventually become part of the longest chain. It is shown that popular mining strategies such as adherence to conservative mining or to the longest-chain rule constitute pure-strategy Nash equilibria. However, these equilibria are not subgame perfect.

Keywords: Blockchain; Proof-of-work; Nash equilibrium; Subgame perfection; Selfish mining (search for similar items in EconPapers)
JEL-codes: C72 C73 D72 E42 (search for similar items in EconPapers)
Date: 2020
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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:197:y:2020:i:c:s0165176520303748

DOI: 10.1016/j.econlet.2020.109614

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