Bitcoin: A Game-Theoretic Analysis

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.

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.