Bitcoin: A Game-Theoretic Analysis
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Micah Warren
About this book
The definitive guide to the game-theoretic and probabilistic underpinning for Bitcoin’s security model. The book begins with an overview of probability and game theory. Nakamoto Consensus is discussed in both practical and theoretical terms.
This volume:
- Describes attacks and exploits with mathematical justifications, including selfish mining.
- Identifies common assumptions such as the Market Fragility Hypothesis, establishing a framework for analyzing incentives to attack.
- Outlines the block reward schedule and economics of ASIC mining.
- Discusses how adoption by institutions would fundamentally change the security model.
- Analyzes incentives for double-spend and sabotage attacks via stock-flow models.
- Overviews coalitional game theory with applications to majority takeover attacks
- Presents Nash bargaining with application to unregulated environments
This book is intended for students or researchers wanting to engage in a serious conversation about the future viability of Bitcoin as a decentralized, censorship-resistant, peer-to-peer electronic cash system.
Explains the game theoretic underpinning of Bitcoin from inception to large-scale adoption. Combines basics of game theory, probability and the Proof-of-Work protocol. Includes end of chapter exercises, and python code snippets.
Author / Editor information
Micah Warren is Associate Professor of Mathematics at the University of Oregon. He earned his Ph.D. from the University of Washington in 2008 and spent five years at Princeton University before making his way to Oregon. Micah's primary area of research is in geometric analysis, where he has authored over 30 publications with applications to partial differential equations, optimal transportation and the geometry of large data sets, and been awarded two National Science Foundation research grants. At University of Oregon, he has taught a ranging variety of courses on subjects including Bitcoin, voting science, geometric flows and dynamical systems.
Topics
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Frontmatter
I -
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Preface
V -
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Acknowledgments
VII -
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Contents
IX -
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1 Basic of cryptographic payments
1 -
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2 Probability spaces
25 -
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3 Game theory basics
46 -
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4 Monopolizing pool
62 -
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5 Basic double-spend game
69 -
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6 Censorship attacks
90 -
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7 Economics of mining
112 -
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8 Selfish mining
123 -
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9 Strategic mining
138 -
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10 What discourages strategic mining?
169 -
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11 Declining block subsidy
174 -
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12 The Flattening ASIC cost curve
184 -
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13 Attacks
198 -
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14 Direct frontal takeovers
225 -
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15 Nash bargaining
234 -
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16 Coalitional game theory
251 -
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17 Stock, flow, and economic considerations
273 -
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18 Bitcoin as it matures
291 -
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Bibliography
321 -
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Index
325
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Manufacturer information:
Walter de Gruyter GmbH
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10785 Berlin
productsafety@degruyterbrill.com
