CIFRA UvA Finance Seminars: Matthieu Bouvard (McGill University)
The Blockchain Folk Theorem
Blockchains are distributed ledgers, operated within peer-to-peer networks. If reliable and stable, they could offer a new, cost effective, way to record transactions and asset ownership, but are they?
We model the blockchain as a stochastic game and analyse the equilibrium
strategies of rational, strategic miners. We show that mining the longest chain is a Markov perfect equilibrium, without forking on the equilibrium path, in line with the seminal vision of Nakamoto (2008). We also clarify, however, that the blockchain game is a coordination game, which opens the scope for multiple equilibria. We show there exist equilibria with forks, leading to orphaned blocks and also possibly to persistent divergence between different chains.
The seminar will be held in room M 3.02
Roeterseilandcampus - building M
Plantage Muidergracht 12 | 1018 TV AmsterdamGo to detailpage
+31 (0)20 525 5250