EconPapers    
Economics at your fingertips  
 

The blockchain folk theorem

Bruno Biais, Christophe Bisière, Matthieu Bouvard and Catherine Casamatta

No 873, IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse

Abstract: Blockchains are distributed ledgers, operated within peer-to-peer networks. If reliable and stable, they could offer a new, cost effective, way to record transactions and asset ownership, but are they? We model the blockchain as a stochastic game and analyse the equilibrium strategies of rational, strategic miners. We show that mining the longest chain is a Markov perfect equilibrium, without forking on the equilibrium path, in line with the seminal vision of Nakamoto (2008). We also clarify, however, that the blockchain game is a coordination game, which opens the scope for multiple equilibria. We show there exist equilibria with forks, leading to orphaned blocks and also possibly to persistent divergence between different chains.

Date: 2017-05, Revised 2017-11
New Economics Papers: this item is included in nep-des, nep-mic and nep-pay
References: Add references at CitEc
Citations: View citations in EconPapers (8)

Downloads: (external link)
https://idei.fr/sites/default/files/IDEI/documents/wp/2017/wp_idei_873.pdf Full text (application/pdf)

Related works:
Journal Article: The Blockchain Folk Theorem (2019) Downloads
Working Paper: The blockchain folk theorem (2019)
Working Paper: The blockchain folk theorem (2018) Downloads
Working Paper: The Blockchain Folk Theorem (2017) Downloads
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:ide:wpaper:31763

Access Statistics for this paper

More papers in IDEI Working Papers from Institut d'Économie Industrielle (IDEI), Toulouse Contact information at EDIRC.
Bibliographic data for series maintained by ().

 
Page updated 2024-06-11
Handle: RePEc:ide:wpaper:31763