THE PRISONER’S DILEMMA

The Prisoner’s Dilemma is a game which proves why two rational individuals acting in their own self interest may not cooperate to achieve an optimal outcome. This theoretical game is played as follows: Two friends are arrested for a crime. They are held in solitary cells without means of communicating with one another. The prosecutor’s do not have enough evidence to imprison both people on the principal charge, but they can both be imprisoned for lesser charges. Each person is offered the same bargain, in their own cell, at the same time. They are each given the option to cooperate with one another by remaining silent, or to betray, and testify that the other person committed the crime.

In this game there are four possible outcomes*:

1) A and B both betray each other, and each of them serves two years in prison.

2) A betrays B, but B remains silent. A is freed, while B serves three years in prison.

3) A remains silent, but B betrays A. A serves three years in prison, while B is freed.

4) A and B both remain silent. Both of them will serve only one year in prison for the lesser charge.

* It is implied that the decision to betray or remain silent will not affect a player’s reputation or well being in the future. Imagine there are no repercussions outside of the possible prison sentences. The strategy to this game changes when players play multiple times in a row, but that is a topic for another essay.

Below is the payoff Matrix for Prisoner’s Dilemma.

Payoff Matrix for The Prisoner's Dilemma

Payoff Matrix for The Prisoner's Dilemma

Description of the Payoff Matrix

Description of the Payoff Matrix

We can see from this payoff matrix that to achieve the optimal outcome one player must betray the other. That means that two purely rational players will betray each other. Though there is a slight advantage in both players remaining silent (a shorter prison sentence), the risk of your partner defecting is very high. The Prisoner’s Dilemma is a non-cooperative game, as the players have no information about the other player’s respective choice, so there is no means of agreement, but even if they could agree, there is no external enforcement agent binding players to their agreement. The Prisoner’s Dilemma is a game of complete information in that each knows the payoffs and strategies available to the other, but also one of imperfect information, because, at the decisive moment, one does not know whether their co-player has kept silent or betrayed.

THE BITCOIN DILEMMA

How does this apply to Bitcoin? A similar model can be found on any scale in our Bitcoin game. If you take any two individuals, businesses, competing nations, large corporations, any entities for whom the goal is to acquire more capital and enrich themselves, they are all witting or unwitting participants in the Bitcoin Dilemma. Players can either choose to accumulate Bitcoin at any moment or defer to a higher price.

Payoff Matrix for The Bitcoin Dilemma

Payoff Matrix for The Bitcoin Dilemma

On September 7th, El Salvador became the first country to make Bitcoin legal tender. The world is watching this experiment, and Bitcoiners are eager to see what country will be next to adopt Bitcoin as nations are forced to compete through accumulating or be left behind.

In September, Edward Snowden took to Twitter to urge nations to embrace Bitcoin. After El Salvador made Bitcoin legal tender, the game-theoretic prisoner's dilemma of nation's Bitcoin adoption started playing out in global geopolitics. The famous whistleblower highlighted that Bitcoin favors those entities (at any level) that adopt it early, thereby putting pressure on other parties, which will be penalized for being laggards.

Adoption works like this on an individual level too, any insular community ignorant of Bitcoin can live some time without noticing the effects of not owning Bitcoin, although as soon as one member of the community begins to own the hardest money known to us, and that stack begins to appreciate, those who notice their success are presented at every moment with a choice to buy Bitcoin now or put off buying Bitcoin, only to buy it later at a higher price.

(http://www.autoadmit.com/thread.php?thread_id=5007388&forum_id=2#43784279)

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In part one of this series, we examine the game theory of bitcoin, an often mentioned but often misunderstood aspect of bitcoin adoption.

What is game theory? Simply put, if you are playing any game of strategy, like chess, any move you make in the game will have to be countered by your opponent. The strategic decisions that you and your opponent make will ultimately determine who wins and who loses the game.

So how does this relate to Bitcoin? Bitcoin is the greatest invention since the Gutenberg press. The Gutenberg press affected the game theory of how the Church and State worked and how information was shared with the world. When Johannes Gutenberg invented his press, he was essentially moving his chess piece to checkmate the Church. For the most part, up until the invention of the Gutenberg press, the Church and people in positions of power or education could read, write and spread whatever information they wanted. Before the printing press, there were limited copies of important writings such as the Bible. Any knowledge about the world mostly came from whatever your local town had available for a literate figurehead to read in church or school. Most people were not able to read or write, so they had to depend on others to gain their knowledge of the world. People were told what to learn, believe and how to live their lives by the Church. As long as the State and the Church controlled what the people were taught they could control the people's ideologies.

Bitcoin has the same game theoretics as the Gutenberg press, but it is working toward separating the State from Money. Now let’s envision a chessboard where the "world’s most powerful players" (WMPPs) — that is, banks, governments, special interest groups — are playing on one side of the chess board and Bitcoin is on the other side. This chess game between Bitcoin and the WMPPs has been the longest chess game to have ever been played because it has been going on for 12 years. In the game of chess, there are two possible outcomes, stalemate or checkmate. There is no chance that Bitcoin will face a stalemate in its game against the WMPPs, because a stalemate means that neither player wins or loses. A stalemate results when neither player can make a move that would result in the game progressing any further.

Alternatively, when Bitcoin checkmates the WMPPs king and wins the game of chess, Bitcoin will have become a store of value and medium of exchange for the whole world. The WMPPs cannot checkmate Bitcoin because, at most, if it were possible for the entire world to ban Bitcoin, as far-fetched as that sounds, Bitcoin would just go underground and be used like the Tor network, aka dark web.

This year, the WMPPs have made the following chess moves against Bitcoin along with "Bitcoin’s game theoretic countermoves" (BGTC):

WMPPs Move #1: China banned all bitcoin miners from their country. China represented approximately 65% of the computing power that runs the Bitcoin network.

BGTC: Bitcoin miners moved to the U.S. and other bitcoin miner-friendly countries. The resilience of the Bitcoin network was greatly tested by this huge move by the second most powerful country in the world. The Honey Badger does not care about China or any other powerful country’s decision about it. Bitcoin has the mindset of the “little engine that could” and will soon become a steamroller that all countries will have to get out of the way of or get “steamrolled" by.

WMPPs Move #2: The United States snuck in a cryptocurrency “provision” within its “Infrastructure bill” so as to get $28 billion worth of taxes to fund the $1 trillion “infrastructure bill.” The cryptocurrency “provision” was horribly worded by people in D.C. that did not have any clue as to what bitcoin or cryptocurrencies were.

BGTC: Bitcoiners called all their senators and fought for the cryptocurrency provision to be reworded and less harsh on the Bitcoin industry. This Bitcoin movement sent shockwaves among the halls of Congress and even though the "provision" did not change in favor of cryptocurrencies, the shockwaves that were caused by Bitcoiners will forever be felt. Bitcoin, the protocol, did not care about the bill nor the opinions of man and kept running to the tune “tick tock next block.”

WMPPs Move #3: The Environmental, Social and Governance (ESG) movement puppeteered Elon Musk to come to the "realization" of Bitcoin’s “immense” amount of energy usage and the need to make Bitcoin “greener.”

BGTC: The Bitcoin Mining Council was created by Michael Saylor and after compiling an immense amount of energy usage data from 23 miners (62% of the mining industry) that freely joined the council, it was found that Bitcoin currently generates more than 50% of its usage from renewable energy. Bitcoin crashed to $29,000 after the Musk and China FUD in a span of a few months. Bitcoin’s price is now close to $50,000. The Honey Badger doesn't care about Musk or the ESG, but the Bitcoin Mining Council is serving as a great way to educate the masses about Bitcoin's energy usage.

WMPPs Move #4: The International Monetary Fund (IMF) tried to strong-arm El Salvador into not passing a law that would allow bitcoin to become legal tender in the country, by threatening that they would not support El Salvador.

BGTC: The President of El Salvador took things into his own hands and did what he thought was best for his people in passing a bill over a span of one day to allow bitcoin to become legal tender in El Salvador. El Salvador started using bitcoin as legal tender on September 7, 2021, which is like Bitcoin moving its pawn to the end of the chessboard and all avid chess players know what happens to a pawn when it reaches the end of a chess board. Pawns become queens, and the queen is the most powerful piece in the game of chess. This game theoretic move by Bitcoin will start a chain reaction among other countries to adopt bitcoin, help bank the unbanked, and protect the purchasing power of those who adopt it from the rampant printing of fiat by all Nation States.

In conclusion, the Bitcoin network will continue to operate no matter what the WMPPs say, do or think. Some of the greatest, most powerful entities like the IMF, China, United States and ESG movement have tried 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. You might even argue that Bitcoin is artificial intelligence considering how it has countered the WMPPs every move for 12 years but that will be for a different article."

(http://www.autoadmit.com/thread.php?thread_id=5007388&forum_id=2#43784383)