Network Optimization for a New Cryptocurrency

Abstract

Since the current cryptocurrencies has failed to reach the level of normality of standard fiat currencies and banking systems there exist a need for a new cryptocurrency if this shall ever be the case. This project will be a part of creating and designing such a cryptocurrency that hope to compete with the fiat currencies of our time. This with the following research question: In the examined network, would increasing the reward received by the participants who successfully validate a transaction result in faster validation time and thereby faster transactions? This question is examined with basis in game theory and simplified simulations to be able to draw conclusions about how the network behaves. Conclusions such as when the participants increases the system speed decreases or that when the money in the system increases there exist an incentive for the participants to work faster. Possible Nash equilibriums are also examined to guide the participants when deciding strategies. Since the purpose of this project is to create a cryptocurrency that can compete with fiat currencies a short comparison between cryptocurrencies and fiat currencies are discussed.