A Game Theoretic Analysis of Resource Mining in Blockchain

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

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: Blockchain Bitcoin Mining Dynamic Game Theory Differential Game Hamilton-Jacobi-Bellman Equation Social Optimum Nash Equilibrium myopic Nash equilibrium Pigovian 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: 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},
      url = {https://eprint.iacr.org/2018/780}
}