In this section, we will see how game theory comes into the picture.
Game theory is the study of mathematical models of conflict and cooperation between intelligent rational decision makers. It is mainly used in economics, political science, and psychology, as well as in logic and computer science.
Sounds exciting, doesn't it? Let's see how it applies to Bitcoin's decentralized consensus.
First, we need to consider that Bitcoin mining is a capital-intensive business. This means that miners need to make a large capital investment in expensive mining computer hardware, also known as mining rigs. Bitcoin mining is so industrialized nowadays that most of the hash power comes from large data centers, also called mining pools.
Besides capital expenses in physical hardware, there are also substantial operating expenses to run a mining...
