The Bitcoin Mining Game

Authors

  • Nicolas Houy CNRS - GATE-LSE

DOI:

https://doi.org/10.5195/ledger.2016.13

Keywords:

Bitcoin, Mining, Game theory

Abstract

This article deals with the mining incentives in the Bitcoin protocol. The mining process is used to confirm and secure transactions. This process is organized as a speed game between individuals or firms – the miners – with different computational powers to solve a mathematical problem, bring a proof of work, spread their solution and reach consensus among the Bitcoin network nodes with it. First, we define and specify this game. Second, we analytically find its Nash equilibria in the two-player case. We analyze the parameters for which the miners would face the proper incentives to fulfill their function of transaction processors in the current situation. Finally, we study the block space market offer. 

References

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Published

2016-12-21

How to Cite

Houy, N. (2016). The Bitcoin Mining Game. Ledger, 1, 53–68. https://doi.org/10.5195/ledger.2016.13

Issue

Section

Research Articles