Social terms  |  Technical terms  |  Bitcoin Economics terms  |  Game Theoretical terms

You can link directly to a specific term, using “#term”. Use a “-” between words. Example:

Social Terms

Bitcoin maximalist – 1) originally a pejorative coined by Vitalik in a blog post – a person who blindly believes Bitcoin to be the best in all things related to cryptocurrency.

2) a person that believes they know Bitcoin’s position is unassailable by nature of technology adoption curves, economic incentives and network effects. It is the position based on the most evidence and research. It is the logical and scientific position.

Bitcoin minimalist – a person who believes that Bitcoin’s consensus protocol layer should be kept robust and simple to minimize vulnerabilities. This is done by moving most processes, features and functions up the stack, to other layers, in the very same way the internet itself has scaled and improved.

Bitcoiner –  a term of endearment, a label for a person heavily involved in bitcoin, similar to bitcoin maximalist but not derogatory.

Buttcoin – a famous skeptical subreddit r/buttcoin. They always make fun of bitcoiners, but sometimes have good skeptical takes. They have been wrong 90% of the time on the anti-bitcoin FUD.

Casascius coin – (ca-say-tious) – an early physical bitcoin coin made by Mike Caldwell, there are large runs and limited editions, more of the story here.

Corn – slang form of bitcoin.

Etherium – 1) a common misspelling of Ethereum made by people new to the space. 2) a slightly trollish way to spell Ethereum to point out that all its investors are noobs and are investing in a marketing ponzi.

Exit scam – When a founder or central party to an investment disappears with the money. These were quite common early on in Bitcoin and remain a risk today. It’s best to always hold your bitcoin on a wallet you control, like a hardware wallet. Never invest a significant amount of money with people you know only from the internet.

Fiatsplaining – A very new term coined by a patron of the show @WahWhoWah – it means that a person uses simple outdated mainstream financial arguments in a discussion with a bitcoiner.

FOMO – Fear of missing out – An emotional reaction to a price increase that makes you chase and be more likely to buy the top of a rally. The opposite of a panic reaction to a price decrease.

FUD – Fear Uncertainty and Doubt – FUD is found in any community and usually consists of unfounded rumors or claims aimed at causing an emotional reaction from other members or even outsiders. It can be targeted at different demographics within or without the community. For example, certain types of rumors can scare new traders or owners of bitcoin, but don’t affect more experienced bitcoiners. To protect against FUD you must learn as much about bitcoin as possible (technicals and history), and find sources of information you can trust.

Hodl – variant of hold – first used in a forum post. The author was drunk and furious at his poor trading performance during the December 2013 rally. He misspelled the word hold and it quickly became a viral meme in the community. Today, it has morphed into an ideology, where hodlers are people that will never sell their coins. It’s a very important concept in bootstrapping a store of value for bitcoin.

Bitcoin Spartan hodling the line

Hodler – a person who hoards bitcoin and will not sell is massive dips in price, because they are in it until the end, as it were.

Monetary maximalism – a system of logical arguments which examines the market forces which pressure money to be one good to the furthest extent possible.

Nocoiner – a recent term, even has made it into the urban dictionary now – a person who has no Bitcoin. Nocoiners (usually Socialists, Lawyers or MBA Economists ) are people who missed their opportunity to buy Bitcoin at a low price because they thought it was a scam, and who is now bitter at having missed out. The nocoiner takes out his or her bitterness on Bitcoin Hodlers, by constantly claiming that Bitcoin will crash, is a scam, is a bubble, or other types of easily refuted FUD.

Noob – someone new to Bitcoin. This term carries a slight feeling of empathy, since we were all new at some point.

Permanoob – someone who is not new to Bitcoin, but has seemingly struggled to learn basic concepts about money, economics, game theory, scaling and alike. These people usually have a profit motive in the way of their learning. They either have large bags of altcoins, a blockchain company, or produce media and play a role of a permanoob as an interviewer.

The Flippening – the much anticipated event where Ethereum would overtake Bitcoin in market cap, it never came – the term was adapted to all sorts of similar events in the 2017 scaling conflict, like hashpower on rival chains, node count, etc.

The Halvening – the reduction in block reward that happens roughly every four years – funny form of halving – this term appeared in 2015 as the block reward reduction was approaching. You can watch the countdown with the halvening rocket here. The bitcoin community likes to come up with little in group sayings and this one caught on. The ending of “ening” has been adopted in other terms like “The Flippening.”

Reckless – in a sense it is a used literally to mean “(of a person or their actions) without thinking or caring about the consequences of an action”, but it is often used in relation to Bitcoin’s Lightning Network. When lightning was starting out in alpha, people recklessly started using it before the protocol developers said it was ready. There are some products that have embraced this meme, like Recksplorer for the Lightning Network.

Rekt – intentional misspelling of wrecked – used to describe losing all your bitcoin, or losing an argument badly.

Scam – (1) A project that intentionally misleads investors to steal their money. (2) A project doomed to failure through ignorance and leads to investors losing money and wasting time. This ignorance can be technical or economic, or both.

Scammer – (1) A person who intentionally misleads investors. (2) A person whose actions unwillingly will lead to investors losing money and wasting time. It’s very hard to tell between these two types of scammers if you little education in the space. For this reason, don’t dismiss people calling out scams or scammers without asking for clarification. Be wary of people defending scams or scammers with labels of the accuser. Scammers operate best when skeptics are marginalized.

Shitcoin – an altcoin or token that will horribly underperform bitcoin long term.

Technical Terms

ASIC – Application Specific Integrated Circuit – These are computer chips specifically designed to work on one or one family of algorithms. The introduction of ASICs to bitcoin caused the difficulty of mining to skyrocket, making it nearly impossible for basement miners to get a ROI. ASICs are a hotly debated issue today, because of the relative centralized manufacturing process. One major company has come to dominate Bitcoin ASIC manufacturing, Bitmain, though this is quickly changing as three new companies are beginning delivery of their chips in 2018.

Bitcoin – a set of rules that when followed by a piece of software, the software’s actions are recognized as valid by other software on the Bitcoin network.

bitcoin – the native asset token in the Bitcoin network with a total supply of 21,000,000.

Bitcoin Address – an identifier of 26-35 alphanumeric characters, beginning with the number 1 or 3, that represents a possible destination for a bitcoin payment. Addresses can be generated at no cost by any user of Bitcoin. Every Bitcoin address stands for a number and most Bitcoin addresses are 34 characters. Addresses derived and controlled by multiple private keys can be made and are called Multisig.

Block – a file containing transactions and a block header, primarily to order transactions and provide proof of work, analogous to a page in a ledger – Blocks are “found” in the process of mining and appended to the chain of previous blocks. In Satoshi’s words from a comment in the original software:

Bitcoin Spartan hodling the line

Fig. 1 – Satoshi on blocks and the block chain.

Block chain (also written as “blockchain“) – a chain of blocks – The decentralized ledger of transactions and block headers in bitcoin. The block chain is only one piece of the whole system balanced by incentives. Block chains require proof of work and are append only. They provide a censorship resistant database at the cost of efficiency. Centralized databases are much more efficient.

Some say blockchain and block chain (“block space chain”) are different. “Blockchain” has come to mean a friendlier more palatable-to-suits version of bitcoin. While “block chain” is a decentralized ledger created through proof of work. The word block chain did not appear in the whitepaper, but did make its first appearance written by Satoshi in the original software, see Fig. 1 and Fig. 2:

Fig. 2 – Satoshi on the block chain.

Block reward – also known as block subsidy – the reward of bitcoin for finding a block, the incentive for miners to mine. When a miner finds a block they create a special transaction called a coinbase transaction where they create virgin coins at their own address. There is a decreasing maximum amount of reward, halved every 210,000 blocks, roughly every 4 years. The block reward started at 50 coins, halved to 25 in 2012, and halved again in 2016 to the current 12.5 coins. In 2020, the reward will be halved again to 6.25 coins.

The block reward is a very important part of the incentive structure of bitcoin. It provides an incentive to miners to maintain the block chain and order transactions into a block to prevent double spending. It is the sole incentive for miners. Some say miners also have a second incentive to mine, that being the right to vote on upgrades, but that is a perversion of the incentive structure and also impossible to implement.

Byzantine Fault Tolerance –  the dependability of a fault-tolerant computer system, particularly distributed computing systems, where components may fail and there is imperfect information on whether a component has failed. The term is derived from the Byzantine Generals’ Problem, where actors must agree on a concerted strategy to avoid catastrophic system failure, but some of the actors are unreliable. Byzantine fault tolerance has been also referred to with the phrases interactive consistency or source congruency, error avalanche, Byzantine agreement problem, Byzantine generals problem, and Byzantine failure. Wikipedia

Cold wallet – or offline wallet, also cold storage – this is a wallet created and maintained offline making it impossible to hack. In the past, many people printed private/public key pairs on paper from an offline computer and kept them in a safe. Hardware wallets are a derivative of a cold wallet.

Consensus – 1) Agreement on the current state of the network. This form of consensus is always 100%. Some nodes may be behind or ahead other other nodes, however, if nodes have the same information, they will be in agreement of the current state. This type of consensus is a direct result of the consensus rules.

2) Academic or development consensus is different than state consensus. It is a general consensus. When an update to the network is proposed, it first goes through a lengthy and rigorous process of peer review. No mandatory process has been or can be created for this due to the permissionless decentralized nature of Bitcoin. The proposal continues to get reviewed and discussed until all criticisms have been adequately answered. Again, there’s no hard and fast rule for when this is or what constitutes adequately. Many times it’s when the person who raised the criticism is satisfied with the answer, or that a large majority of people involved in the debate are satisfied. The ultimate arbiters are the nodes. You can sum up this type of consensus by saying it’s “the absence of sustained opposition.”

Deterministic – an algorithm which, given a particular input, will always produce the same output, with the underlying machine always passing through the same sequence of states. Deterministic algorithms are by far the most studied and familiar kind of algorithm, as well as one of the most practical, since they can be run on real machines efficiently. Wikipedia

Difficulty adjustment – or difficulty retarget – bitcoin is a self-adjusting system. When more hashpower starts mining the difficulty to find a block can adjust to retarget the 10 minute goal for new blocks. Bitcoin’s difficulty is retargeted every 2016 blocks or about 2 weeks.

Double spend – this is the main problem that a block chain solves. Prior to bitcoin it was impossible to solve the double spending problem without a central authority. Specifically, double spending is sending the same coin to multiple recipients. When transactions go through a central clearing house, they’d throw out the second tx, but in a decentralized system it was impossible. Bitcoin solves this through proof of work and ordering transactions into blocks.

Dual Consensus Problem – this problem exists when the functioning of an application relies on a decentralized consensus, as in a block chain network, and the physical world existence of a good. Keeping these two completely separate realms in sync requires centralization, and if the agreement of these two consensus mechanisms is a centralized process, the need for the decentralized consensus disappears.

Example 1, to gold-backed token relies on the decentralized consensus for the token and the physical world consensus on the assignment of ownership of the gold. Example 2, tokenized real estate relies on the decentralized consensus for the token and the physical world consensus of the assignment of ownership of the property. If something happens to the real world item, such as theft of the gold or destruction of the property by fire, the token is useless. On the other hand, if the token is stolen, i.e. hacked from your wallet, the dual consensus also breaks.

Fork – There are two ways this term is used. 1) A split in the codebase of bitcoin. Forking bitcoin is as easy as copying the code and changing a few things. This process results in an altcoin.

2) There’s also another type of fork in regards to the block chain. If two miners find a block at almost the exact same time, and some on the network receives a block from one miner, and the other half of the network receives a block from the other miner, there is a fork in the block chain. These types of forks usually don’t last longer than 10 mins, because they are resolved when the next block is found. In very rare circumstances, forks of this nature can last for 3 blocks, but they eventually converge. It’s very safe to count 3 blocks as irreversible in this sense.

Soft Fork – A backwards compatible change to the codebase. Soft forks make the rules of bitcoin more restrictive, so the resulting valid set is smaller. All actions on the network after the soft fork remain valid to older versions of the software. This is an extremely important concept for a decentralized network. Since bitcoin is decentralized, you have control over your own node, and getting everyone to update to a new version is impossible. There’s still people running 3-4 year old versions on the bitcoin network and they continue to function as they always have.

Hard Fork – A non-compatible change to the codebase. Hard forks change the rule set of bitcoin, so some new rules can be previously invalid and some previous valid rules can be made invalid. The resulting valid rule set is different. Since bitcoin is decentralized, some nodes will not upgrade and will be left behind/kicked off the network. Hard forks have massive centralizing pressure for a network, and creates a central party of developers or large stakeholders that take control, because hard forks introduce new attack vectors not present in soft forks. Political attacks, social engineering attacks or stakeholder attacks from governments can control the central party and force changes onto the network.

Full node – also known as a fully validating node – Created by running the bitcoin software on a computer. Includes a copy of the block chain, mempool and UTXOs. Validates transactions and blocks, can broadcast transactions and act as a wallet. A full node is your vote on the network, your tool to individual sovereignty over your money. No one can tell you what software to run on your node. In the scaling conflict the winning side promoted running your own, and even kept the protocol light to make running a full node easier. Full nodes are the backbone of a decentralized network. If a node receives an invalid block (doesn’t conform to the rules of the network) it rejects it and disconnects from th

Genesis block – The very first block on the bitcoin block chain, mined by Satoshi on Jan 6th, 2009. There was a message contained in the genesis block from a Times headline, “Chancellor on Brink of Second Bailout for Banks.” Another less known fact is that there was a period of time before the second block ending on the 10th. Also the coins in the genesis block are unspendable.

Halving – the reduction in block reward that happens roughly every four years – serious form of halvening.

Hot wallet – a wallet that holds your private keys and with access to the internet, most commonly on a smartphone. In the early days of bitcoin these wallets were very unsafe, but have come a long way over the last couple of years. They now have encrypted keys in isolated environments. It’s very important that you are careful where you download your wallet. Never keep more than spending money on a hot wallet.

MASF – Miner Activated Soft Fork – When miners signal for readiness for a new feature, this signaling activates the use of new features. This was encapsulated in BIP9 activation, which was how Segwit was originally designed to be activated. The major problem of MASFs is it changes the incentive structure of bitcoin itself and invites politics into the process. It also, wrongly, gives the miners a feeling that they are more important than they are or in charge.

MAHF – Miner Activated Hard Hork – a mechanism to activate a non-backwards compatible upgrade to the Bitcoin network via miners as opposed to nodes. Whether a MAHF is even possible it is debatable.

Mempool – the group of transactions in a node’s memory waiting to be confirmed. In Bitcoin transactions are broadcast so the entire network can hear them, until they show up in a block they sit in the mempool. Miners take txs from the mempool and order them into blocks.

Each node may have a slightly different mempool, because they hear a slightly different set of txs than other nodes. Nodes can set an individual mempool max size for their node, ie 50MB, so anything more than that, the node will drop older txs. A reason for restricting the size of the mempool could be performance. Another option for limiting your mempool is by transaction fee. You can set it to not retain txs with fees lower than a set limit, ie 5 sats/byte.

The mempool is “cleared” by miners ordering transactions into blocks. With a maximum block weight now of 4MB and 6 blocks/hour, the mempool can theoretically be cleared at a rate of 24MB/hour. However, if people refuse to use segwit type txs, the block size is more limited.

Mining – 1) Bitcoin mining was first described in the white paper, but was adapted from earlier efforts by Wei Dai and Hal Finney. It serves several functions, it is the process by which new bitcoins are released into circulation, distributed randomly, transactions are confirmed, and the keeps the system immutable.

2) Mining is the use of software, hardware and electricity to find a random number which solves a math problem. The difficulty of finding the random number is programatically adjusted to keep the average time to find it to 10 minutes. Miners are incentivized to do this work by allowing them to claim a reward of bitcoin in special transaction in each block called a coinbase transaction. They are also rewarded to order transactions through fees, and doing so increases the value of the block reward, too.  When a miner finds a valid solution they hash it together with ordered valid transactions into a block and broadcast it to the network. For their reward to be claimed, their solution must be added to the block chain by the network. If two miners simultaneously broadcast a block, and because of network latency both are accepted by different parts of the network the tie is broken by the next block. Each block is built on the previous block, so whatever the next block builds on becomes the winner.

3) Behavior of miners is the result of an extremely dynamic process within the Bitcoin incentive structure. It’s not fully understood and the subject of lively debate within the community.

Native Token – a purely digital token that solely exists on and for the network. The native token is directly dependent on the other Nakamoto Consensus rules, and they on it. It’s the keystone that locks the network’s economic incentive structure together.

Non-deterministic – an algorithm that, even for the same input, can exhibit different behaviors on different runs, as opposed to a deterministic algorithm. There are several ways an algorithm may behave differently from run to run. A concurrent algorithm can perform differently on different runs due to a race condition. A probabilistic algorithm’s behaviors depends on a random number generator. An algorithm that solves a problem in nondeterministic polynomial time can run in polynomial time or exponential time depending on the choices it makes during execution. The nondeterministic algorithms are often used to find an approximation to a solution, when the exact solution would be too costly to obtain using a deterministic one. Wikipedia

Oracle – the entity responsible for bringing external data into a decentralized network. Many smart contracts depend on external data to function. For example, a smart contract may do something when a sports team wins a game. The oracle is responsible for telling that smart contract which sports team won. See Oracle Problem.

Oracle Problem – Oracles are not trustless, they are centralized and controlled by one or a group of parties, therefore the smart contracts that rely on oracles are not decentralized or trustless. Many efforts have been made to solve the oracle problem, which rely on obfuscated trust. None have been successful. If a smart contract relies on a centralized trusted oracle, there’s no need for the smart contract itself to be on a decentralized network. The overall trust level of an app is the most trusted aspect of that app. So if the oracle is centralized, the whole app is centralized and trusted. Related to the Dual Consensus Problem.

Private key – a private key in the context of Bitcoin is a secret number that allows bitcoins to be spent. Every Bitcoin wallet contains one or more private keys, which are saved in the wallet file. The private keys are mathematically related to all public keys and Bitcoin addresses generated for the wallet

Proof of work – (proof-of-work, PoW) – a piece of data which is difficult (costly, time-consuming) to produce but easy for others to verify and which satisfies certain requirements. Producing a proof of work can be a random process with low probability so that a lot of trial and error is required on average before a valid proof of work is generated. Bitcoin uses the Hashcash proof of work system as a decentralized consensus mechanism to keep all nodes on the same history. Bitcoin nodes will follow any block which has valid proof-of-work and valid data in the block.

Accumulated proof of work secures the network’s history, because to change the history, an attacker would need to redo the proof of work. An extremely costly and time consuming process. The attack would need to sustain >50% of the network’s hash power for an extended period of time to even rewrite a few blocks. A vast majority of 80% or more would be needed to dominated the current and historical record of Bitcoin.

Proof of stake – (proof-of-stake, PoS) – an alternative decentralized consensus model to proof-of-work where cost and time is replaced by putting some of the native token on the network at stake with a risk of loss for dishonest behavior. There are many more attack vectors to PoS than pure PoW. It has been a well studied topic, with live experiements in the form of cryptocurrency networks. To date, no PoS network has been able to garner much confidence, especially relative to PoW networks.

Public key – a 2D point coordinate on an Elliptic Curve derived from private key. The private key is used to sign messages (in case of Bitcoin – the transactions), and the public key is used to check whether the signature is correct. The public key can either be used raw in a transaction, or turned into a Bitcoin address by means of hashing and other operations.

Seed phrase – (also known as a seed recovery phrase or backup seed phrase) – a list of words which store all the information needed to recover a Bitcoin wallet. Wallet software will typically generate a seed phrase and instruct the user to write it down on paper. If the user’s computer breaks or their hard drive becomes corrupted, they can download the same wallet software again and use the paper backup to get their bitcoins back. Anybody else who discovers the phrase can steal the bitcoins, so it must be kept safe like jewels or cash. For example, it must not be typed into any website. Seed phrases are an excellent way of backing up and storing bitcoins and so they are used by almost all well-regarded wallets. Read more

UASF – User Activated Soft Fork – a mechanism to activate a backwards compatible upgrade to the Bitcoin network, where users coordinate and agree to adopt the change as a large organic distributed consensus. It’s the opposite of a centrally planned change. As a soft fork, the upgrade is backwards compatible, so doesn’t mandate any action on the part of nodes (the Segwit UASF was slightly different than this due to the hardcoded requirements included in the upgrade).

UAHF – User Activated Hard Fork – a mechanism to activate an incompatible upgrade the Bitcoin network where users coordinate and agree to adopt the change as a large organic distributed consensus. The extremely important distinction is incompatible, because it is very hard or impossible to force all nodes to upgrade. Leaving nodes behind out of consensus shrinks the network. If any of those nodes constitute significant economic value, the hard fork will definitely decrease the price of the hard forked coin, influencing others not to upgrade. In Bitcoin, HFs are impossible if there is an option to not upgrade, they are only viable in existential cases. All other HFs in Bitcoin result in an altcoin.

Whitepaper – The original outline of ideas written by Satoshi Nakamoto and released on 31 Oct 2008. The white paper introduced the ideas behind Bitcoin, but wasn’t the first application of the ideas. That came two months later.

Bitcoin Economics Terms

Austrian Economics – A tradition starting generally around the study of human action in St. Thomas Aquinas and the University of Salamanca, flowing through the scholastics to economists like Richard Cantillon, Turgot, and getting its modern form in Menger, Böhm-Bawerk, Mises and Rothbard. The foundational ideas are free market, individual rights, subjective value, an Austrian theory of money, and business cycles. One of things that stands out in Austrian Economics after Mises is a methodological reliance on logic vs empiricism of other modern economic schools of thought. What that means is we can reach some understanding through reason. Read more

Cantillon Effect – an uneven expansion of the amount of money that favors people closer to the source of the new money. This effect is used to explain how mispricing and misallocation of capital results from money printing and how it damages the economy. Named after Richard Cantillon, an 18th century economist.

Hard Money – money that is hard to produce, measured by its stock to flow ratio. Until Bitcoin, money production depended on price to control supply, the more valuable the good was the more supply would increase. For example, if the price of gold was to double, it would incent more mining and more supply to be brought to market. In Bitcoin, a higher price still incents capital to go into mining but the issuance rate is very tightly controlled. Bitcoin is therefore the hardest money ever created.

Neo-Austrian – A branch of the Austrian School that places primary importance on Bitcoin and building unstoppable tools for civil disobedience.

Plunge Protection Team – The Working Group on Financial Markets (also, President’s Working Group on Financial Markets, the Working Group, and colloquially the Plunge Protection Team) was created by Executive Order 12631, signed on March 18, 1988, by United States President Ronald Reagan. Its goals are enhancing the integrity, efficiency, orderliness, and competitiveness of our Nation’s financial markets and maintaining investor confidence. It’s commonly believed that this body acts to support stock market prices directly.

Seigniorage – profit made by a government by issuing currency, especially the difference between the face value of coins and their production costs.

Sound Money – a commodity based money that has arisen from the market as the most liquid and salable good, and used as reserves for government money. Sound money is has many benefits over fiat. It can’t be printed by governments, so the corruption and misallocation from money printing is controlled. It also tempers and alleviates the worst effects of boom bust business cycles in the economy. Bitcoin will be sound money, but it’s unlikely to be used in any reserve scheme, because it’s highly tradable.

Unit bias – the reasoning that the relative price of a whole unit of a money says about its fair value. For example, when people compares the price of bitcoin at say $20,000 and the price of an altcoin at $10 and concludes the altcoin has a lot more room for growth. Of course, this is a fallacy and doesn’t take into account total supply, liquidity, robustness, or any actual metric at all.

Game Theory Terms

Credible Commitment – an attempt to induce a certain behavior by signaling your own intentions toward a strategy. By signaling the intention toward a strategy, the player is effectively trying to restrict the choices of the other player/s. “I promise not to defect.” The problem with commitments of this nature is the player could be lying.

A credible commitment is only needed if they are trying to break or avoid a Nash equilibrium/status quo.

Finite Game – a game played with the purpose of winning. Finite games have a set number of players, set rules with clear boundaries and set victory conditions. Profit isn’t the purpose of this kind of game, profit can result from winning, but survival in this zero sum environment is the purpose. Examples of finite games are chess, sporting events, wars, political battles for absolute power, etc. In the study of game theory matrices, infinite games are one round.

Infinite Game – a game played with the purpose of continuing the game. Infinite games have no set rules or players, in fact the rules must change through the game, precisely to prevent a player from winning, and also to bring as many players as possible into the game. In the study of game theory matrices, infinite games are infinitely repeated games.

​Lindy Effect – The longer a non-perishable thing, like technology, survives, the longer it will survive. My comments: Not necessarily that it must survive longer. Taleb uses the terms life expectancy and expected, in this regard. The only qualifier we can rely on is time itself. If it lasts relatively longer, it means it’s robust enough to last, and so it will last.

Nash Equilibrium – ​a solution to a game, that if given a choice, no player would change their strategy. This is not an absolute best case for each player, but it is a best case for both involved.

A Nash equilibrium is very stable in repeated games, because it’s the trust minimized solution.

Prisoners’ Dilemma – ​a very basic game that explains the traditional framework for game theory with strategies and payoffs. It is most often found in payoff matrix form or word form.

Prisoners’ Dilemma Payoff Matrix

Shelling Point (also called a focal point) – is a strategy that people will tend to use in a game in the absence of communication, because it seems natural, special, or relevant to them. ​This has importance to bitcoin, because it’s the first and the biggest, most liquid, most secure, most well-known, the most respected technically, the most users, etc etc etc, so when investors look into this space, bitcoin stands out as the only investable asset. Also, in a game theoretic sense, status quo is the shelling point. If there is a credible commitment problem, or uncertainty in any way, the shelling point will win, because it’s the most obvious and established consensus.