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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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
Meetup Pivate Key Berlin 10/2017 Intro: Cryptoeconomics
By Ethereum Madrid
