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Finite blockchain games


Ewerhart, Christian (2020). Finite blockchain games. Working paper series / Department of Economics 355, University of Zurich.

Abstract

This paper studies the dynamic construction of a blockchain by competitive miners. In contrast to the literature, we assume a finite time horizon. Moreover, miners are rewarded for blocks that eventually become part of the longest chain. 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.

Abstract

This paper studies the dynamic construction of a blockchain by competitive miners. In contrast to the literature, we assume a finite time horizon. Moreover, miners are rewarded for blocks that eventually become part of the longest chain. 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.

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Additional indexing

Item Type:Working Paper
Communities & Collections:03 Faculty of Economics > Department of Economics
Working Paper Series > Department of Economics
Dewey Decimal Classification:330 Economics
JEL Classification:C72, C73, D72, E42
Uncontrolled Keywords:Blockchain, proof-of-work, Nash equilibrium, subgame perfection, selfish mining
Language:English
Date:September 2020
Deposited On:20 Jul 2020 12:19
Last Modified:18 Mar 2022 09:51
Series Name:Working paper series / Department of Economics
Number of Pages:11
ISSN:1664-705X
Additional Information:Revised version
OA Status:Green
Official URL:https://www.econ.uzh.ch/en/research/workingpapers.html?paper-id=1037
  • Content: Updated Version
  • Language: English
  • Description: Revised version September 2020
  • Content: Published Version
  • Language: English
  • Permission: Download for registered users
  • Description: Version July 2020