The Bitcoin Mining Game: On the Optimality of Honesty in Proof-of-work Consensus Mechanism
Juan Beccuti () and
Christian Jaag
No 60, Working Papers from Swiss Economics
Abstract:
We consider a game in which Bitcoin miners compete for a reward of each solved puzzle in a sequence of them. We model it as a sequential game with imperfect information, in which miners have to choose whether or not to report their success. We show that the game has a multiplicity of equilibria and we analyze the parameter constellations for each of them. In particular, the minimum requirement to find it optimal not to report is decreasing with the number of miners who are not reporting, and increasing the heterogeneity among players reduces the likelihood that they choose not to report.
Keywords: Bitcoin; Mining; Proof of work; Game theory (search for similar items in EconPapers)
JEL-codes: C72 D84 (search for similar items in EconPapers)
Date: 2017-08
New Economics Papers: this item is included in nep-exp, nep-gth, nep-mic and nep-pay
References: Add references at CitEc
Citations: View citations in EconPapers (1)
Downloads: (external link)
http://www.swiss-economics.ch/RePEc/files/0060JaagBeccuti.pdf
Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
HTML/Text
Persistent link: https://EconPapers.repec.org/RePEc:chc:wpaper:0060
Access Statistics for this paper
More papers in Working Papers from Swiss Economics Contact information at EDIRC.
Bibliographic data for series maintained by Urs Trinkner ().