A Novel Bitcoin Mining Scheme Based on the Multi-Leader Multi-Follower Stackelberg Game Model

Abstract

Since the introduction of Bitcoin in 2009, it has gained a significant popularity around the world. Bitcoin is a peer-to-peer electronic payment system where payment transactions are stored in a data structure named the block-chain. Based on a fully decentralized network, the blockchain is maintained by a community of participants. In Bitcoin system, mining is the fundamental concept. In this paper, we design a new Bitcoin mining scheme based on the multi-leader multi-follower Stackelberg game model. To effectively implement the peer-to-peer relationship of Bitcoin system agents, we assume that mining pool operators are leaders and mining participating users are followers in our Stackelberg game. By using the dynamics of feedback-based repeated process, leaders, and followers can be interacting with one another and make their decisions in a way to reach an efficient system solution. Without the influence of any central authorities and organizations, the proposed method is practically applied to a distributed Bitcoin system. Through system level simulations, we show that our game approach outperforms the existing Bitcoin schemes in providing a better fair-efficient system performance.