In an evaluation released on Monday, ASXN, an rising crypto analysis agency, outlines the dynamics of world Bitcoin adoption by the lens of sport principle. The report titled “The Game Theory of Bitcoin Adoption Among Nations” offers an examination of how nations can leverage mathematical sport principle to strategically undertake Bitcoin.
The report follows on the heels of Donald Trump’s announcement on the Bitcoin 2024 convention that he’ll convert all BTC’s owned by the US authorities by enforcement actions right into a “strategic Bitcoin stockpile”.
Bitcoin Game Theory Explained
The report begins by framing BTC adoption inside the broader context of sport principle, a self-discipline that evaluates the strategic choices made by people or entities beneath circumstances of uncertainty and competing pursuits. According to ASXN, “Game theory provides a structured framework to predict the outcomes of nation-level strategies in adopting digital currencies, taking into account not only the economic benefits and technological advancements but also the potential geopolitical shifts.”
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According to the idea of ‘First Mover Advantage’, early adoption of BTC can place nations advantageously on a number of fronts. The report states, “Nations acting as first movers in the Bitcoin arena may set precedents in legal and regulatory frameworks, attract global crypto enterprises, and secure a significant share of the blockchain innovation landscape.”
However, it contrasts these benefits with the pitfalls of untimely regulatory frameworks and the volatility of Bitcoin’s market worth, which might pose substantial dangers to nationwide economies. The report provides, “Once a few influential nations adopt Bitcoin, others will follow suit to avoid being left behind – creating a bandwagon effect. This effect is driven by both the returns to adoption as well as the risks of non adoption. This is when the Bitcoin adoption cycle enters the steepest part of the s-curve.”
The ‘Payoff Matrix’—a basic software in sport principle—is utilized by ASXN to dissect the decision-making course of of nations contemplating Bitcoin adoption for nations. ASXN elaborates on how this matrix helps international locations assess the potential returns and dangers related to varied strategic selections. “Each nation faces a unique matrix based on its economic structure, political climate, and market dynamics. The optimal strategy, while generally skewing towards adoption due to the projected global ascendancy of cryptocurrencies, must still be tailored to individual national circumstances,” the report elaborates.
Furthermore, the report additionally introduces the idea of the ‘Best Reaction Function’ within the context of Bitcoin adoption, explaining how nations develop methods by anticipating the selections of others. “A nation’s strategy is influenced not only by its direct gains from adopting Bitcoin but also by the expected actions of other nations, which might alter the global economic and technological landscape,” the report states.
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The researchers add how the bandwagon impact might play out; “The logic plays out something like – Nation 1 assesses the cost benefit trade off and decides on adoption. Nation 1 realizes that all other nations are also going to choose adoption, Nation 1 concluded that, given that all nations will choose adoption, they should increase adoption speed so as not to lose competitive edge. Slowly, then all at once.”
ASXN makes use of a number of real-world functions as an instance the theoretical ideas mentioned. The case of El Salvador is examined in depth, showcasing how its early adoption has influenced different nations’ perceptions and methods in the direction of Bitcoin. The evaluation extends to how Wisconsin’s pension fund investment in Bitcoin ETFs displays a broader development of sub-national entities assessing cryptocurrency as a viable element of their monetary methods, and the substantial dedication by MicroStrategy is highlighted as a company parallel to nationwide methods.
Looking ahead, the report discusses the potential future trajectories of Bitcoin adoption, influenced by each technological developments and evolving geopolitical dynamics. It particularly addresses Robert Kennedy Jr.’s proposal at Bitcoin Nashville 2024 to accumulate 550 BTC every day till the US amasses 4 million BTC, which represents 19% of the whole obtainable BTC provide. This strategy goals to replicate the proportion of world gold reserves that the US at the moment maintains compared to different international locations.
And the Bitcoin sport principle is already taking part in out. “Whilst the ideas Trump presented at Bitcoin Nashville may or may not happen, the simple fact he publicly acknowledged Bitcoin & it’s properties is a win & we are already seeing early signs of the effects of this,” the researchers conclude.
They seek advice from Johnny Ng, a member of Hong Kong’s Legislative Council, who has been advocating for the incorporation of Bitcoin into town’s monetary reserves following Trump’s announcement.
At press time, BTC traded at $66,660.
Featured picture created with DALL·E, chart from TradingView.com
