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

ethereummadrid

14237 59049 76241 81259 90215 100000 132156 157604

ethereummadrid

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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Thomas Schelling

​Game theory economist 

1921- 2016

 

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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?

 

You choose
Block A
You choose
Block B
 
Others choose
Block A
0
Others choose
Block  B
0

Reward - main chain

Reward - main chain

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Which block to choose?

 

You choose
Block A
You choose
Block B
 
Others choose
Block A
0
Others choose
Block  B
0

Reward - main chain

Reward - main chain

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On-chain applications need to know the

off-chain truth. 

 

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Centralised Oracle   

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Webpages, experts, sensors  

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Central point of failure and control.

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Decentralised Oracle  

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Wisdom of the crowd.

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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.

 

You choose
Block A
You choose
Block B
 
Others choose
Block A
0
Others chain
Block B
0

Reward - main chain

Reward - main chain

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In the attacker model.

 

You choose
Block A
You choose
Block B
 
Others choose
Block A
Others chain
Block B
0

Reward - main chain

Reward - main chain

Bribe

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In the attacker model.

 

You choose
Block A
You choose
Block B
 
Others choose
Block A
Others chain
Block B
0

Reward - main chain

Reward - main chain

Bribe

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THANK YOU

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