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5.4 Future Work
This thesis was able to give insight into the design of a cryptocurrency and provided some vital information for the calibration of a cryptocurrency like Bitcoin, without the need for complete structural changes. While it seems inevitable that one day the Bitcoin blockchain needs a whole redesign, the solutions provided in this thesis could help in the medium run to mitigate some problems cryptocurrencies are currently facing. Fur-thermore, a model has been created that is able to reproduce realistic results. However, its accuracy needs to be further improved and extended to support future research. More data would need to be aggregated to better calibrate some parameters. Especially the underlying exponential growth functions does not seem to reflect the reality accurately.
Future work could include the development of an improved model that allows agents to decide whether to participate or not. More specifically, scholars from game theory in cryptocurrency mining games could help to improve the decision process of miners, giving miners further reasoning for their actions. If a higher level of accuracy can be achieved, further investigations could and should be conducted using this thesis’ model, to analyze the effect of more drastic changes mentioned in the previous chapter.
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t Simulation time step of the model, where on step is equal to one day.
Time Window for Chartist
T Time window for chartist they consider to make their order decision.
Hash Rate per Dollar
R(t) Hash rate per Dollar for each simulation step with H s · $.
Hash H A value returned by a hashing function.
Second s A time second.
Electricity Consumption
ξ(t) The electricity consumption for one hour in Watts per hash and second with W
H/s.
Watts W Physical unit for power.
Hardware Hashing Power
ri,u(t) The hashing power of hardware u of miner i bought at time t .
Hardware Electricity Consumption
ei,u(t) The power consumption of hardware u of miner i bought at t.
The electricity price per W/h in US-Dollar.
Fiat Cash
Fraction
γ1,i(t) The fraction of the fiat cash a miner uses for buying new hardware.
Bitcoin Frac-tion
γi(t) The fraction of Bitcoins a miner sells to buy new hardware.
Agent’s Fiat Cash
ci Fiat cash held by agent i.
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Bitcoin Price p(t) Bitcoin price at time step t.
Transaction Limit
tlimit The daily transaction limit of the model’s blockchain.
Number of
Transactions
L(t) Number of transactions before the miners process them.
Bitcoin Gener-ated per step
B(t) The number of Bitcoins generated by the Bitcoin protocol every simulation step.
Total Bitcoin Income
bT ot(t) The total Bitcoin income for the whole network, including newly generated Bitcoins as well as transaction fees.
Networks total Hashing Power
rT ot(t) The networks total hashing power at step t.
Buy Order
Order Fraction β The fraction of either Bitcoin or fiat cash used for an order depending on the type of it.
Buy Order
Limit
buylimi(t) The limit for the buy order of agent i at step t.
Sell Order Limit
selllimi(t) The limit for the sell order of agent i at step t.
Gaussian Dis-tribution
Ni(1.05, σi) A Gaussian distribution with a mean of 1.05 and a standard deviation of σi.
Standard Devi-ation
σi The standard deviation used for the Gaussian distribution. It is defined as σi = Kσ(ϕ).
Standard Devi-ation Constant
K Constant used for standard deviation which is set to 2.5..
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σ(ϕ) The standard deviation for the last time steps with a time window of ϕ which is set to 20.
Order Expira-tion
Expi The expiration date of an order issued by agent i at step t.
Rounding Function
Round Rounds a value to the nearest integer.
Patience pati The patience for orders of agent i.
Transaction Price
PT Bitcoin Price used for a market transaction.
Transaction Fee
fi Transaction fee attached by agent i in Bitcoin.
Last Transac-tion Fee
flast(t) The fee of the transaction with the lower fee still within the transaction limit at simulation step t.
Expiration of Transaction
ExpOrdi(t) The expiration of a transaction issued by agent i at step t
Patience for Transaction
patOrdi The Patience of agent i for a transaction.
Total Number of Agents
N (t) The total number of agents at step t.
Agent’s Initial Bitcoins
bi,0 The initial amount of Bitcoins of agent i.
Wealthiest Agent’s Bit-coins
bmax The amount of Bitcoins of the initial wealthiest agent.
Power Law
Constant
δ A constant used for the power law for the initial wealth dis-tribution.
Parameter for Bitcoin Gener-ation
bitgen Similar to B(t) gives bitgen the amount of Bitcoins gener-ated per day. For simplicity reasons only the initial value is listed, even though it follows the same function as B(t).
Wealth Π(t) The total wealth in the model at step t.