If you're venturing into the world of technical Bitcoin literature, "Bitcoin: A Game Theoretic Analysis" by Professor Micah Warren is a significant addition to your reading list. However, tread cautiously; this is a graduate-level textbook. Literally.
It delves into the vulnerabilities and potential failure points of Bitcoin. Offering a broad, but incomplete, exploration of the dynamics shaping Bitcoin's failure scenarios.
Professor Micah Warren, a seasoned expert in Game Theory, and a former Bitcoin holder, approaches the subject in good faith and with an adversarial mindset. The book raises critical questions about potential failure scenarios for Bitcoin, drawing on a wealth of technical knowledge cited from over 55 academic papers.
The heart of the book revolves around a pivotal question: if Bitcoin were to fail, what are the most likely failure modes?
Yet, there are areas where the analysis falls short, lacking specificity in potential mitigations to the vulnerabilities identified. Often relying on speculation, this book is akin to a good game of checkers, but not a full game of chess. It's scenarios typically think only one step ahead, not several.
In any case, the full scope of Bitcoin's game theory was not captured in this book. Though it was well snapshot, assuming a static state. Which is a problem, since Bitcoin is not static, but rather dynamic and evolving. To the authors credit, the book does acknowledge this limitation several times.
Interestingly enough, there was also an interview with Professor Micah discussing this book with several interesting people. Noteworthy contributors, included Matthew Pines, Bennett Tomlin, and Matthias Venturine. All with interesting backgrounds and affiliations.
During this interview, the moderator asks a question specifically mentioning the deep state and Bitcoin. This question and the panelists themselves conjured the following interesting thought.
If the deep state were to commission a study on Bitcoin and it's vulnerabilities, a professor of game theory would be a good place to start. And this book is exactly the kind that would be written from such a commission.
From that perspective, I like to think of this book as the general state of awareness of Bitcoin's game theory and vulnerabilities. It could even be the deep states red team playbook.
In any case, the book explores key aspects of Bitcoin, from its consensus mechanism to the potential threats of selfish mining, strategic mining, block withholding, Mining Pool bribes, Petty Compliant Mining, 51% attacks, 33% attacks, 64% attacks, OFAC compliant mining and more.
The first half of the book meticulously examines Bitcoin's vulnerabilities, With a heavy dose of math and a primer on Bitcoin basics, the focus is mainly on the mining aspect of Bitcoin. While the technical intricacies of mining take center stage, the book occasionally touches on nodes but lacks the same emphasis given to miners. Which in my view is an oversight, since Bitcoin nodes are what secure Bitcoin to a large degree, and enfranchises it's users.
The second half of the book explores Bitcoin as a socio-technical system, delving into the interplay between human beliefs and the instantiation of these beliefs in the form of a software protocol. The discussion extends to potential coalitions forming within the network, considering threats from corporations, financial institutions, and nation-states.
The book also examines the halving schedule, its impact on the cost of production, and the potential positive feedback loop in Bitcoin's value. The discussion acknowledges the complexity of predicting Bitcoin's value, considering factors such as market demand, adoption, regulatory developments, and macroeconomic conditions. A critical analysis also examines the utopian scenario outlined by many as hyperbitcoinization. But often it leaves out the dynamics of second and third layers like the lightning network.
In conclusion, "Bitcoin: A Game Theoretic Analysis" serves as a significant contribution to the understanding of Bitcoin's vulnerabilities. But, concerning nodes and the lightning network, it misses much. It is an especially good book for a more advanced audience well-versed in game theory and Bitcoin's technical intricacies. While the book may leave some questions unanswered and scenarios underexplored, its emphasis on adversarial thinking and academic rigor makes it a valuable addition to the literature on Bitcoin's security landscape.
I recommend anyone on Bitcoin's blue team to first critically watch the interview above, and then seriously consider reading this book. The book gets a lot wrong, but it also gets some things right and introduced several lesser known vulnerable-Bitcoin scenario's worth knowing.
From this perspective, it's a great thought exercise for the technically minded Bitcoiner looking out for Bitcoin's future.
If you're on Bitcoin's Blue team, please take some time on this one. It's worth reading.