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What Is Cryptocurrency Game Theory: A Basic Introduction

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Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#11
post #9
post #7

I was really glad to see this article specifically point out that proof-of-work schemes that allow for "specialized ASICs" to be designed to accelerate them--which in the high-level concept of proof-of-work is usually seen as a problem (as it creates an elite class of invested and thereby slightly more centralized miners instead of a diverse population of decentralized users)--has a game theory benefit that is relate…

All proof-of-work algorithms can be accelerated by specific hardware of some kind or another. Bitcoin is perhaps the extreme example, with ASIC miners. But coins using other algorithms are mined by using top-end graphics cards, which is still a form of specialized hardware. There's no algorithm that can't improve upon a standard computer. Other forms of proof-of-work have been mooted, e.g. algorithms that require lot…

A top-end graphics card has other uses and other value, and is something a large number of people (myself included) already own; and most importantly: they can always be used to mine a different coin, which entirely removes them from contention as "specialized" as used in this article (as the entire argument was based around how the hardware would not be useful for a different coin).

As for "all things can be accelerated", the question here is more "how unique is the thing being accelerated?" (and so I would agree the wording in my comment was slightly off), as this argument about the grim trigger holds up if and only if the specialized hardware being used is not valuable for other uses (including other coins).

As an example of what you can conclude with this thought process: if you are a small "startup coin" you should seriously considering a proof-of-work scheme that is weirdly unique in that it forces people to not be able to reuse hardware they have from another (particularly if more valuable) coin.

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#12
post #11
post #9

Earlier quoted context omitted.

All proof-of-work algorithms can be accelerated by specific hardware of some kind or another. Bitcoin is perhaps the extreme example, with ASIC miners. But coins using other algorithms are mined by using top-end graphics cards, which is still a form of specialized hardware. There's no algorithm that can't improve upon a standard computer. Other forms of proof-of-work have been mooted, e.g. algorithms that require lot…

A top-end graphics card has other uses and other value, and is something a large number of people (myself included) already own; and most importantly: they can always be used to mine a different coin, which entirely removes them from contention as "specialized" as used in this article (as the entire argument was based around how the hardware would not be useful for a different coin). As for "all things can be acceler…

True enough, the graphics cards certainly have alternate uses while a bitcoin miner becomes a very heavy paperweight once the difficulty increases and it turns unprofitable to run.

Your thought process leads to another interesting game theory puzzle: There's a benefit in creating a coin that has a unique proof of work, but as you say, there's also value in letting miners easily switch their existing rigs to mine your coin. I wonder which is actually the best choice?

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#14

I'm glad to see this. With many systems trying to move to proof-of-stake[0] algos to secure their chains, I've been lamenting the lack of game theory experts in a lot of these projects. [0]: https://en.wikipedia.org/wiki/Proof-of-stake

Do you think Satoshi Nakamoto is a "game theory expert"?

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#15

I never realized just how useful game theory could be to cryptocurrency. Strategy is really important when evaluating the security of a particular crypto, or trying to optimally invest.

its entirely game theory because the only way to secure these distributed systems is if the participants all benefit most by enforcing the code and not deviating

All protocols of the world were thought with "game theory" in mind. They just didn't call it by that fancy name.

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#16
> Think of mangoes. It is easy for anyone to get into the market, all that anyone has to do is to grow mangoes.

Really? I would have assumed one has to successfully grow mangoes. And that there be demand for mangoes.

If that's all there is to it, why aren't we all mango growers?

Just because we CAN apply certain game theories to trade, doesn't mean we're obliged to.

I'm rather tired of the religion of economics. "Because some financial analyst found math that looks similar, it's now the rule of human society."

And why does everyone on the planet need to get into the market trading away their time/creative work? What law of reality dictates that? Oh, right. None of them. It's just more humans thinking other humans should do things their way.

Still clinging to these embedded notions that the universe has inherent meaning not simply inherent structure. Meaning is in the eye of the beholder.

This sort of stuff replaces a persons ability to consider and create conscious ideas for themselves and is instead more "regurgitate what I tell you, peon!"

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#17

I never realized just how useful game theory could be to cryptocurrency. Strategy is really important when evaluating the security of a particular crypto, or trying to optimally invest.

There is a new field called cryptoeconomics that studies the application of game theory to cryptocurrencies. Here's an interesting talk about it: https://youtu.be/pKqdjaH1dRo

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#18
post #14

I'm glad to see this. With many systems trying to move to proof-of-stake[0] algos to secure their chains, I've been lamenting the lack of game theory experts in a lot of these projects. [0]: https://en.wikipedia.org/wiki/Proof-of-stake

Do you think Satoshi Nakamoto is a "game theory expert"?

Which one of them?

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#19
post #14

I'm glad to see this. With many systems trying to move to proof-of-stake[0] algos to secure their chains, I've been lamenting the lack of game theory experts in a lot of these projects. [0]: https://en.wikipedia.org/wiki/Proof-of-stake

Do you think Satoshi Nakamoto is a "game theory expert"?

I'm not sure I get your point?
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