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Finite blockchain games

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  • Christian Ewerhart

Abstract

This paper studies the dynamic construction of a blockchain by competitive miners. In contrast to the literature, we assume a finite time horizon. It is shown that popular mining strategies such as adherence to conservative mining or to the longest-chain rule constitute pure-strategy Nash equilibria. However, these equilibria are not subgame perfect.

Suggested Citation

  • Christian Ewerhart, 2020. "Finite blockchain games," ECON - Working Papers 355, Department of Economics - University of Zurich, revised Sep 2020.
    • Handle: RePEc:zur:econwp:355
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    File URL: https://www.zora.uzh.ch/id/eprint/188648/7/econwp355.pdf
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    References listed on IDEAS

    as
    1. Bruno Biais & Christophe Bisière & Matthieu Bouvard & Catherine Casamatta, 2019. "The Blockchain Folk Theorem," The Review of Financial Studies, Society for Financial Studies, vol. 32(5), pages 1662-1715.
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    Cited by:

    1. Rico-Peña, Juan Jesús & Arguedas-Sanz, Raquel & López-Martin, Carmen, 2023. "Models used to characterise blockchain features. A systematic literature review and bibliometric analysis," Technovation, Elsevier, vol. 123(C).
    2. Barros, Fernando & Bertolai, Jefferson & Carrijo, Matheus, 2023. "Cryptocurrency is accounting coordination: Selfish mining and double spending in a simple mining game," Mathematical Social Sciences, Elsevier, vol. 123(C), pages 25-50.

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    More about this item

    Keywords

    Blockchain; proof-of-work; Nash equilibrium; subgame perfection; selfish mining;
    All these keywords.

    JEL classification:

    • C72 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Noncooperative Games
    • C73 - Mathematical and Quantitative Methods - - Game Theory and Bargaining Theory - - - Stochastic and Dynamic Games; Evolutionary Games
    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System

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