Imagine a game, where you have to compete with another individual and both of you have a finite number of decisions to make, but there are several external factors that can affect your chances of winning. In such a constrained game, what would be your mindset at every point in time? 

If you are fascinated by such a world and want to know more about this, then continue reading this article. Here, we shall explore one of the most discussed concepts- game theory and how that has contributed to shaping the world of crypto assets over the last two decades. We will also learn how one simple concept has contributed in a big way to this trillion-dollar industry of crypto assets

For example, a person mining cryptos needs to be efficient and has to follow the rules of the network protocol, while computing equations. If that person is efficient and abides by the rules, he will survive and will be rewarded coins. On the other hand, if he uses malicious tactics, then he will be disconnected from the network and won’t be rewarded with any coins at all. 

If all of this is sounding “different” to you, then do not worry! We will explore these in detail. However, before we proceed, let us understand what game theory is. 

What Is Game Theory?

Based on the principles of applied mathematics, Game Theory was initially invented to assess the possible actions of rational individuals in a given constrained situation. In one sense, game theory is a science of strategy. The theory talks about how independent and competing actors make optimal decisions, when put in a strategic context.

In other words, the theory helps one understand human behaviour under constrained circumstances. However, game theory has found its use case in several fields ranging from consumer study to marketing. Now game theory has found its application in the realm of cryptos as well. Further, all these different fields use game theory to understand human psychology and behavioural patterns.

This theory had several tried-and-tested models. However, the “prisoner’s model” is the most popular among them. 

Key Takeaway 

Concepts of game theory have played a vital role in developing seamless interactions between blockchain nodes. However, the security of a blockchain also depends on how many participants there are and how strict the protocols are. If all of this fascinates you, and you wish to learn more about crypto asset investing, then visit Zebpay – India’s leading crypto exchange. Start your trading journey on Zebpay today!

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