Ewerhart, Christian (2020). Finite blockchain games. Economics Letters, 197:109614.
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.
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.
| Item Type: | Journal Article, refereed, original work |
|---|---|
| Communities & Collections: | 03 Faculty of Economics > Department of Economics |
| Dewey Decimal Classification: | 330 Economics |
| Scopus Subject Areas: | Social Sciences & Humanities > Finance
Social Sciences & Humanities > Economics and Econometrics |
| Uncontrolled Keywords: | Economics and Econometrics, Finance, Blockchain, Proof-of-work, Nash equilibrium, Subgame perfection, Selfish mining |
| Language: | English |
| Date: | 1 December 2020 |
| Deposited On: | 23 Oct 2020 14:36 |
| Last Modified: | 08 Oct 2022 00:00 |
| Publisher: | Elsevier |
| ISSN: | 0165-1765 |
| Additional Information: | Also published as Working Paper No. 355, Department of Economics, University of Zurich, see https://doi.org/10.5167/uzh-188648. |
| OA Status: | Hybrid |
| Publisher DOI: | https://doi.org/10.1016/j.econlet.2020.109614 |
Ewerhart, Christian