Paper 2018/780

A Game Theoretic Analysis of Resource Mining in Blockchain

Rajani Singh, Ashutosh Dhar Dwivedi, Gautam Srivastava, Agnieszka Wiszniewska-Matyszkiel, and Xiaochun Cheng

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.

Metadata
Available format(s)
PDF
Category
Applications
Publication info
Preprint. MINOR revision.
Keywords
BlockchainBitcoin MiningDynamic Game TheoryDifferential GameHamilton-Jacobi-Bellman EquationSocial OptimumNash Equilibriummyopic Nash equilibriumPigovian Tax
Contact author(s)
ashudhar7 @ gmail com
History
2019-11-24: last of 3 revisions
2018-09-01: received
See all versions
Short URL
https://ia.cr/2018/780
License
Creative Commons Attribution
CC BY

BibTeX

@misc{cryptoeprint:2018/780,
      author = {Rajani Singh and Ashutosh Dhar Dwivedi and Gautam Srivastava and Agnieszka Wiszniewska-Matyszkiel and Xiaochun Cheng},
      title = {A Game Theoretic Analysis of Resource Mining in Blockchain},
      howpublished = {Cryptology ePrint Archive, Paper 2018/780},
      year = {2018},
      note = {\url{https://eprint.iacr.org/2018/780}},
      url = {https://eprint.iacr.org/2018/780}
}
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