Bitcoin: An Impossibility Theorem for Proof-of-Work based Protocols
11 Pages Posted: 10 Oct 2019
Date Written: February 11, 2019
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