Abstract
Blockchain and cryptocurrency are a hot topic in today’s digital world. In this paper, we create a game theoretic model in continuous time. We consider a dynamic game model of the bitcoin market, where miners or players use mining systems to mine bitcoin by investing electricity into the mining system. Although this work is motivated by BTC, the work presented can be applicable to other mining systems similar to BTC. We propose three concepts of dynamic game theoretic solutions to the model: Social optimum, Nash equilibrium and myopic Nash equilibrium. Using the model that a player represents a single “miner” or a “mining pool”, we develop novel and interesting results for the cryptocurrency world.
Original language | English |
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Journal | Cluster Computing |
Volume | 23 |
Issue number | 3 |
Pages (from-to) | 2035-2046 |
Number of pages | 12 |
ISSN | 1386-7857 |
DOIs | |
Publication status | Published - 1 Sept 2020 |
Bibliographical note
Funding Information:First and second authors were funded by University of Waterloo, Canada. The research of fourth author was financed by grant 2016/21/B/HS4/00695 of National Science Centre, Poland.
Publisher Copyright:
© 2020, The Author(s).
Keywords
- Bitcoin mining
- Blockchain
- Differential game
- Dynamic game theory
- Hamilton–Jacobi–Bellman equation
- Myopic Nash equilibrium
- Nash equilibrium
- Pigovian tax
- Social optimum