Cryptoeconomics 101

private key meet-up, 24/10 berlin

Ethereum Madrid,  Sandra Becker

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How can we achieve consensus?   

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2 people in prison, no communication, if responding equally they get free. 

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14237 59049 76241 81259 90215 100000 132156 157604

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14237 59049 76241 81259 90215 100000 132156 157604

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If people get rewarded to agree on something, without giving them the possibility to exchange directly, they will look for characteristics which leads to a single common answer and they believe everyone follows the same rules, which in practice actually happens.

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You and other person are in NY

you can't communicate,

but if you find each other you get a present.

Where and when do you go?

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Central Station - 12pm

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Application in Proof of Work?

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Block A

Block B

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Which block to choose?

Reward - main chain

Reward - main chain

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Which block to choose?

Reward - main chain

Reward - main chain

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On-chain applications need to know the

off-chain truth. 

Centralised Oracle   

Webpages, experts, sensors  

Central point of failure and control.

Decentralised Oracle  

Wisdom of the crowd.

Schelling Coin Concept.  

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Who won the US election?

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• Choose Hillary or Trump 

• If you choose what the majority says you get a Schelling. 

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Trump as being the truth is the Schelling Point. 

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But ...  

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Bribing attacker model.

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Same game - New rules.  

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• Choose Hillary or Trump 

• If you choose what the majority says you get a Schelling.

• If you choose Hillary, but the majority chooses Trump you'll get the bribe. 

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If you choose Hillary you win in any case. 

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Costs vs. Budget

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Bribing attacker model in Proof of Work.  

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Without attack.

Reward - main chain

Reward - main chain

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In the attacker model.

Reward - main chain

Reward - main chain

Bribe

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In the attacker model.

Reward - main chain

Reward - main chain

Bribe

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THANK YOU