A game theoretic analysis of resource mining in blockchain
- PDF / 818,704 Bytes
- 12 Pages / 595.276 x 790.866 pts Page_size
- 40 Downloads / 183 Views
(0123456789().,-volV)(0123456789().,-volV)
S.I. : BLOCKCHAIN FOR IOT
A game theoretic analysis of resource mining in blockchain Rajani Singh1 • Ashutosh Dhar Dwivedi1,2 • Gautam Srivastava3,4 Xiaochun Cheng6
•
Agnieszka Wiszniewska-Matyszkiel5
•
Received: 27 July 2019 / Revised: 20 September 2019 / Accepted: 19 October 2019 Ó The Author(s) 2020
Abstract Blockchain and cryptocurrency are a hot topic in today’s digital world. In this paper, we create a game theoretic model in continuous time. We consider a dynamic game model of the bitcoin market, where miners or players use mining systems to mine bitcoin by investing electricity into the mining system. Although this work is motivated by BTC, the work presented can be applicable to other mining systems similar to BTC. We propose three concepts of dynamic game theoretic solutions to the model: Social optimum, Nash equilibrium and myopic Nash equilibrium. Using the model that a player represents a single ‘‘miner’’ or a ‘‘mining pool’’, we develop novel and interesting results for the cryptocurrency world. Keywords Blockchain Bitcoin mining Dynamic game theory Differential game Hamilton–Jacobi–Bellman equation Social optimum Nash equilibrium Myopic Nash equilibrium Pigovian tax
1 Introduction A bitcoin is created by miners, using complex mathematical ‘‘proof of work’’ procedures by computing hashes [8]. For each successful attempt, miners get rewards in terms of bitcoin and transaction fees. Miners participate in mining voluntarily in exchange for rewards as income. Electricity plays an essential role in the bitcoin mining process since created blocks and solving computationally hard problems
& Agnieszka Wiszniewska-Matyszkiel [email protected] Gautam Srivastava [email protected] 1
Department of Electrical and Computer Engineering, Faculty of Engineering, University of Waterloo, Waterloo, Canada
2
DTU Compute, Technical University of Denmark, Kongens Lyngby, Denmark
3
Department of Mathematics & Computer Science, Brandon University, Brandon R7A6A9, Canada
4
Research Center for Interneural Computing, China Medical University, Taichung 40402, Taiwan, ROC
5
Faculty of Mathematics, Informatics, and Mechanics, University of Warsaw, Warsaw, Poland
6
Department of Computing Science, Middlesex University, London, UK
uses large amounts of electricity. We can consider electricity as a semi-renewable resource—depending on the source of resources used for its production. The electricity consumed by the mining systems is directly proportional to the computational power of the system being used. The fact is that at each new block creation only one miner will be rewarded (the one who will win the mining game by first creating and updating the blockchain). The remaining miners’ effort, as well as electricity used for mining at that time, will be wasted. Therefore, optimizing the consumption of electricity is one of the essential and most challenging problems effecting bitcoin mining. Bitcoin [19] was introduced in 2009. Its security is based
Data Loading...
