Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

What Is Cryptocurrency Game Theory: A Basic Introduction

blockgeeks.com

Post reply on HN
Print view View original

21–30 of 55 posts

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#21

Post by phailhaus »

Ooh, he was doing so well but his explanation for why users use the main chain instead of a forked chain betrays a fundamental misunderstanding of the blockchain.

There is no "blue chain" or "red chain", there are just blocks that point to other blocks. Branches happen all the time, and sometimes those branches become the main chain. So actually, if the red chain was grown faster than the blue chain, it would become "the main chain". But then the miner's transaction in the blue chain would be ignored!

The main chain is chain with the greatest computational value, it's the chain that takes the greatest amount of CPU power to compromise (and therefore it's the most trustable). It has nothing to do with Schelling point or bounded rationality, because that suggests you can tell that a block is a "forked block" the moment it's created, but you can't.

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#22

Post by Klathmon »

joosters wrote: post #12
saurik wrote: post #11

Earlier quoted context omitted.

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…

SIA is making the bet that somewhat ASIC friendly algorithms are better off.

The argument being that because ASICs are worthless for anything but mining that one coin, you can really accurately gauge and maintain a hashrate across the whole network. It would be crazy expensive to hoard a bunch of ASICs for a specific algorithm but not run them in hopes to launch a secret 51% attack.

With GPUs that's not really an option. Because GPUs can be used for so much more, it would be easy to see where you could suddenly have a flood of GPU power hit your chain which could be massively over 51% quite easily.

And they could be gone again just as quickly, leaving the remaining users with an impossibly high difficulty and killing off the chain (without a hard-fork to fix it).

It's a fascinating read which actually flipped my opinions on ASICs in favor of them now, I highly recommend it [0].

[0] https://blog.sia.tech/choosing-asics-for-sia-b318505b5b51

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#23

Post by davidgerard »

paulgb wrote: post #8

Good overview and I agree with most of it, but I think the power of the grim trigger is overrated here. In the monarchy metaphor, the threat of defection is death. In the crypto example, it's crypto collapsing. As long as the defectors can cash out to fiat before the collapse they are better for it. This is roughly the dynamic that seems to have played out with BCH. Every exchange would be better off (according to th…

> So BCH is now #4 by market cap.

BCH is still so thinly traded that this is a meaningless number.

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#24

Post by albertgoeswoof »

In the crypto world I feel like there is a LOT of talk about theoretical concepts, but nowhere near enough actual implementation. This is really obvious with the ICO craze lately.

I would rather we see some more code written and less talking about game theory and other concepts.

Good article though.

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#27

Post by paulgb »

davidgerard wrote: post #23
paulgb wrote: post #8

Good overview and I agree with most of it, but I think the power of the grim trigger is overrated here. In the monarchy metaphor, the threat of defection is death. In the crypto example, it's crypto collapsing. As long as the defectors can cash out to fiat before the collapse they are better for it. This is roughly the dynamic that seems to have played out with BCH. Every exchange would be better off (according to th…

> So BCH is now #4 by market cap. BCH is still so thinly traded that this is a meaningless number.

It's 4th by volume also.

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#28

Post by paulgb »

saurik wrote: post #10
paulgb wrote: post #8

Good overview and I agree with most of it, but I think the power of the grim trigger is overrated here. In the monarchy metaphor, the threat of defection is death. In the crypto example, it's crypto collapsing. As long as the defectors can cash out to fiat before the collapse they are better for it. This is roughly the dynamic that seems to have played out with BCH. Every exchange would be better off (according to th…

That section is talking about miners, not exchanges; and it specifically notes the limitations and assumptions that even make that possible: in this case, that the Bitcoin proof of work is subject to acceleration using ASICs. Even then, that was a response to a specific attack: using >50% of the mining power to do a takeover of the blockchain, which was itself made more possible (as otherwise it would fizzle) using t…

Fair point, the example of BCH may not have been a good one. I stand by my more general point that grim trigger isn't a strong incentive in crypto because a rational, selfish player can profit from pulling the trigger.

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#29

Post by kanzure »

phailhaus wrote: post #21

Ooh, he was doing so well but his explanation for why users use the main chain instead of a forked chain betrays a fundamental misunderstanding of the blockchain. There is no "blue chain" or "red chain", there are just blocks that point to other blocks. Branches happen all the time, and sometimes those branches become the main chain. So actually, if the red chain was grown faster than the blue chain, it would become…

> because that suggests you can tell that a block is a "forked block" the moment it's created, but you can't.

Invalid blocks are invalid, that's one way to tell. Run the bitcoin protocol rules and you'll get the same results as everyone else.

Re: What Is Cryptocurrency Game Theory: A Basic Introduction

#30

Post by legohead »

What if a country, like Russia, decided it wanted to destroy bitcoin because of a threat to its currency? They have the resources to build up huge mining power and attack the chain for majority, and cause havoc. Is there any kind of protection for this scenario? Would all the other miners just decide to ignore these new jerky miners?
Post reply on HN