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.