Bitcoin selection rule and foundational game theoretic representation of mining competition

Abstract

The Bitcoin selection rule shapes the basic mining (rent-seeking) competition, whose unique Nash equilibrium has been thoroughly investigated in terms of best responses to the overall scale of activity and entry thresholds. It is the aim of the present contribution to deepen such game theoretic aspects of Proof-of-Work and provide a unifying perspective on approaches employing absolute and relative levels of activity, and envision a ‘map’ of strategic space that may frame and cross-fertilize more realistic refinements of mining competition and blockchain phenomenology. The additive aggragation property of the selection rule has pivotal implications for thorough investigations of best response dynamics. Potential lines of progress are briefly sketched.