Global Bitcoin Adoption; A Case of Game Theory

A Study of Bitcoin’s Game Theory

According to the lectures in class, the concept of game theory is extended and applicable to many real-life scenarios in the world of economics. In this article, let’s take a look at the game theory of Bitcoin.

What is Game Theory?

In simple terms, if you are playing a strategy game like chess, your opponent must be able to counter any move you make. The strategic decisions that you and your opponent make will ultimately determine who wins and who loses the game.

How does this relate to Bitcoin?

Since the invention of the Gutenberg press, Bitcoin has been the most ingenious invention because they both have similar circumstances surrounding them. The Gutenberg Press shaped the way that the Church and State functioned and how information was disseminated throughout the world. When Johannes Gutenberg invented the printing press, he was essentially repositioning his chess piece to checkmate the Church.

Until the invention of the Gutenberg Press, the church and people in positions of power or education were the only ones able to read, write, and spread whatever information they desired. There were only a few copies of important writings like the Bible before the printing press. Whatever your local town had available for a literate figurehead to read in church or school provided the majority of your knowledge of the world.

The majority of people could not read or write, so they had to rely on others to teach them about the world. The Church dictated to people what they should know, believe, and do with their lives. The State and the Church could control people’s ideologies as long as they had control over what they were taught.

Bitcoin strives to separate the State from Money while sharing the same game theory as the Gutenberg Press. Let us imagine a chessboard where Bitcoin is on one side and the “earth’s most powerful players” (EMPPs), which are the banks, governments, and special interest groups, are playing on the other. This chess match between Bitcoin and the EMPPs has been going on for 14 years, making it the longest chess match ever played.

There are two possible outcomes in the game of chess: stalemate or checkmate. Bitcoin will never face a stalemate in its game against the EMPPs because a stalemate means that neither player wins or loses. A stalemate occurs when neither player can make a move that would allow the game to progress further.

Alternately, when Bitcoin checkmates the EMPPs king and wins the chess match, it will have established itself as a global store of value and medium of exchange. The EMPPs cannot defeat Bitcoin because, even if it were possible for the entire world to outlaw it, as absurd as it may sound, Bitcoin would just go underground and become very useful for the dark web.

In recent years, we’ve observed the EMPPs make the following strategic chess moves against Bitcoin along with “Bitcoin’s game theoretic countermoves” (BGTC):

EMPPs Move #1: China banned all bitcoin miners from their country. China accounted for roughly 65% of the computing power that powers the Bitcoin network.

BGTC: Bitcoin miners shifted to the United States and other Bitcoin mining-friendly countries. This significant action by the second-most powerful nation in the world put the resilience of the Bitcoin network to the test.

EMPPs Move #2: The Environmental, Social, and Governance (ESG) movement manipulated Elon Musk into “realizing” Bitcoin’s “immense” energy consumption and the need to make Bitcoin “carbon neutral.”

BGTC: Michael Saylor (one of Bitcoin’s whales) founded the Bitcoin Mining Council, and after compiling an enormous amount of energy usage data from 23 miners (62 percent of the mining industry) who freely joined the council, it was discovered that Bitcoin currently generates more than 50% of its energy from renewable energy.

So far, the Bitcoin Mining Council has been an excellent tool for educating the general public about Bitcoin’s energy consumption.

EMPPs Move #3: The International Monetary Fund (IMF) threatened El Salvador with withholding financial assistance if it passed a law that would have made Bitcoin legal tender in the nation.

BGTC: El Salvador’s President took matters into his own hands and did what he thought was best for his people by passing a bill allowing Bitcoin to become legal tender in El Salvador in a single day. On September 7, 2021, El Salvador adopted Bitcoin as a legal tender.

El Salvador’s game-theoretic move will soon set off a chain reaction among other countries to adopt Bitcoin, and in most African countries helps in banking the unbanked.

Conclusion

The Bitcoin network will continue to function regardless of what the EMPPs say, do, or think. The IMF, China, the United States, and the ESG movement have all attempted to attack Bitcoin, but it will continue to move its chess pieces on the world’s chessboard to counter every move because it is a beautifully engineered protocol.

• The invention of the light bulb revolutionized the use of electricity.
• Lamps popularized the use of crude oil, sparking yet another massive revolution.

Who knows if Bitcoin and Blockchain might be the next big thing our generation has to offer the next generation?

Quote Of The Day

“Just waking up healthy is already a privilege that too many people caught up in life, no longer know how to appreciate”

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Also published here.