A game theoretic analysis of resource mining in blockchain

Singh, Rajani, Dwivedi, Ashutosh Dhar, Srivastava, Gautam, Wisznieska-Mayszkiel, Agnieszka and Cheng, Xiaochun ORCID: https://orcid.org/0000-0003-0371-9646 (2020) A game theoretic analysis of resource mining in blockchain. Cluster Computing . ISSN 1386-7857 (Published online first) (doi:10.1007/s10586-020-03046-w)

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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.

Item Type: Article
Keywords (uncontrolled): Blockchain, Bitcoin mining, dynamic game theory, differential game, Hamilton–Jacobi–Bellman equation, social optimum, Nash equilibrium, myopic Nash equilibrium, Pigovian tax
Research Areas: A. > School of Science and Technology > Computer Science
Item ID: 29532
Notes on copyright: © The Author(s) 2020.
This article is licensed under a Creative Commons Attribution 4.0 International License, which permits use, sharing, adaptation, distribution and reproduction in any medium or format, as long as you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons licence, and indicate if changes were made. The images or other third party material in this article are included in the article's Creative Commons licence, unless indicated otherwise in a credit line to the material. If material is not included in the article's Creative Commons licence and your intended use is not permitted by statutory regulation or exceeds the permitted use, you will need to obtain permission directly from the copyright holder.
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Depositing User: Xiaochun Cheng
Date Deposited: 13 Mar 2020 08:52
Last Modified: 13 Mar 2020 08:52
URI: https://eprints.mdx.ac.uk/id/eprint/29532

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