Paper: arXiv 2506.20965

Authors: Craig Steven Wright

Abstract

This paper integrates Austrian capital theory with repeated game theory to examine strategic miner behaviour under different institutional conditions in blockchain systems. It shows that when protocol rules are mutable, effective time preference rises, undermining rational long-term planning and cooperative equilibria. Using formal game-theoretic analysis and Austrian economic principles, the paper demonstrates how mutable protocols shift miner incentives from productive investment to political rent-seeking and influence games. The original Bitcoin protocol is interpreted as an institutional anchor: a fixed rule-set enabling calculability and low time preference. Drawing on the work of Bohm-Bawerk, Mises, and Hayek, the argument is made that protocol immutability is essential for restoring strategic coherence, entrepreneurial confidence, and sustainable network equilibrium.

Complexity vs Empirical Score

  • Math Complexity: 3.5/10
  • Empirical Rigor: 1.5/10
  • Quadrant: Philosophers — conceptual discussion, limited math and data

Why this score: The paper offers an intriguing conceptual synthesis of Austrian economics (Böhm-Bawerk, Mises) and game theory to analyze Bitcoin protocol mutability. However, it is largely theoretical and rhetorical, lacking quantitative backtesting, empirical data, code, or rigorous mathematical derivations in the provided text. Consequently, its empirical rigor and reproducibility are minimal.

Research Flowchart

  flowchart TD
    A[Research Goal: Analyze Strategic Miner Behaviour & Protocol Stability] --> B[Integration of Austrian Capital Theory & Repeated Game Theory]
    B --> C[Inputs: Protocol Rule Mutability & Time Preference Dynamics]
    C --> D[Game-Theoretic Modeling of Miner Incentives]
    D --> E[Analysis of Strategic Shifts: Investment vs. Rent-Seeking]
    E --> F[Findings: Mutable Protocols Drive Short-Term Rent-Seeking]
    E --> G[Outcomes: Protocol Immutability Restores Low Time Preference & Strategic Stability]

Cited References (18)

  1. Capital and Interest: A Critical History of Economical Theory (2019)
  2. On the Instability of Bitcoin Without the Block Reward (2016) — link
  3. Game theory. (2011) — link
  4. A Course in Game Theory (1995) — link
  5. The Calculus of Consent: Logical Foundations of Constitutional Democracy. (1963) — link
  6. Capital and its structure (1956) — link
  7. Segregated witness (segwit) (2017)
  8. Replace-by-fee policy overview (2016)
and 10 more
  1. Man, Economy, and State with Power and Market (2009)
  2. The Use of Knowledge about Society (2005)
  3. Why the Great Depression Lasted So Long and Why Prosperity Resumed after the War (1997)
  4. Investigations into the method of the social sciences, with special reference to economics : formerly published under title, Problems of economics and sociology (1985) — link
  5. The Mystery of Banking (1983)
  6. Law, Legislation and Liberty: A new statement of the liberal principles of justice and political economy (1982)
  7. Hypergames: A model of conflict, misperception, and strategy (1977)
  8. Human Action: A Treatise on Economics (1949)
  9. The Road to Serfdom (1944) — link
  10. The base game G P

0 of 18 cited works are in the corpus; resolved via arXiv source bundles, Semantic Scholar and OpenAlex. Corpus-wide: 2518 linked papers.