Thoughts on Blockchain and Non-cooperative Game Theory

When discussing Blockchain technology, people often fall into a habitual mindset—how to apply it to the real world to change lives. For example, applications in fields such as healthcare, government affairs, and supply chains. This line of thought is undoubtedly reasonable and is one of the ways for Blockchain technology to be implemented and widely accepted. However, if we look at it from a higher dimension, especially from the perspective of Bitcoin as the source of this Blockchain, we will find that it brings a brand new social experiment to human society, which requires us to gradually explore and form a new ecology and theoretical system, rather than simply transferring the old world’s model to a new technological platform.

Non-cooperative games refer to a framework in which the actions of all participants are viewed as individual actions within a strategic environment. It emphasizes that individuals make autonomous decisions without being influenced by others in the environment. Games not only contain conflict elements, but often also include cooperative elements, which frequently overlap. In an agreement, the strategies of participants can mutually affect each other's interests.

An important concept in non-cooperative games is Nash equilibrium. If during a game process, regardless of how the opponent chooses their strategy, a party will choose a certain strategy, then this strategy is called a dominant strategy. When each participant's chosen strategy is optimal given the strategies of all other participants, this combination is defined as Nash equilibrium. Simply put, in the game process, when one party's strategy reaches optimality, other participants should also follow similar strategies to maximize their own interests.

The Bitcoin system is a typical representative of a non-cooperative game system. From the perspective of its underlying mining protocol, each Bitcoin is produced through non-cooperative game mining among miners. The mining strategy of one miner can affect all players participating in the game. When a miner adopts a strategy that can obtain more computing power or more advanced equipment, other players will also imitate and join larger mining pools or purchase similar mining machines, collectively promoting the development of the entire ecosystem.

In the real world, it is difficult for enterprises to achieve non-cooperative games in their production processes; they are usually cooperative games. Bitcoin provides a classic practical model for non-cooperative game theory, and the formation of this model is inseparable from the core concept of "decentralization." The peer-to-peer electronic cash system of Bitcoin, along with the evolving crypto ecosystem, fundamentally aims to overcome the flaws of the "trust-based model," emphasizing that no third party can be fully trusted, and one must verify for themselves and trust oneself.

Early attempts to value Bitcoin involved multiple dimensions, such as the number of nodes, the amount of holdings in addresses, the number of holding addresses, mining hash power, and the number of players participating in the game. These indicators actually reflect the degree of decentralization of Bitcoin. In addition, Bitcoin also addresses the issues of data immutability and combating inflation.

Since the financial crisis of 2008, the development of the Bitcoin system has consumed enormous resources, utilizing the computational power of the physical world to ensure system security through non-cooperative games. This has provided human society with a completely new research field, similar to the macroeconomic theory proposed by Keynes after the Great Depression in the United States in 1929. The Bitcoin white paper and its more than a decade of practical development may also become a new theoretical school for the development of human society.

However, the current development trend of Blockchain seems to be deviating from the original non-cooperative game model, shifting towards a "trust-based" usability direction. The valuations of many projects are beginning to focus on metrics such as throughput, transaction speed, transaction volume, locked amount, user count, etc., rather than emphasizing the degree of decentralization and game theory research. If judged by these standards, the value of Bitcoin may be severely underestimated.

When evaluating and researching blockchain projects, we need to delve into which projects can participate as non-cooperative game systems. At the same time, we should rationally assess non-cooperative game systems and open financial products using different standards, as these are two fundamentally different products. We should judge the value of non-cooperative game systems from multiple perspectives, including the degree of decentralization, the quantity and quality of players participating in the game, the derived ecology, the ability to create native assets and information, and potential.