Download This PaperBitcoin: An Impossibility Theorem for Proof-of-Work based Protocols
11 Pages Posted: 10 Oct 2019
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Bitcoin: An Impossibility Theorem for Proof-of-Work Based Protocols
Cowles Foundation Discussion Paper No. 2204R, 2019
Number of pages: 19
Posted: 15 Nov 2019
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Date Written: February 11, 2019
Abstract
A key part of decentralized consensus protocols is a procedure for random selection, which is the source of the majority of miners cost and wasteful energy consumption in Bitcoin. We provide a simple economic model for random selection mechanism and show that any PoW protocol with natural desirable properties is outcome equivalent to the random selection mechanism used in Bitcoin.
Keywords: Bitcoin, Random Selection, Proportional Selection Rule, Impossibility Theorem
JEL Classification: C72, D02, D47
Suggested Citation: Suggested Citation
Leshno, Jacob and Strack, Philipp, Bitcoin: An Impossibility Theorem for Proof-of-Work based Protocols (February 11, 2019). Cowles Foundation Discussion Paper No. 2204, February 2019, Available at SSRN: https://ssrn.com/abstract=3467058 or http://dx.doi.org/10.2139/ssrn.3467058
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