2024

Mover

Bitcoin

In an analysis <a href="https://x.com/asxn_r/status/1818017375159206132" target="_blank" rel="noopener noreferrer nofollow">released</a> on Monday, ASXN, an emerging crypto research firm, outlines the dynamics of global Bitcoin adoption through the lens of game theory. The report titled “The Game Theory of Bitcoin Adoption Among Nations” provides an examination of how nations can leverage mathematical game theory to strategically adopt Bitcoin.
The report follows on the heels of Donald Trump’s <a href="https://www.newsbtc.com/news/bitcoin/donald-trump-213239-bitcoin/" target="_blank" rel="noopener noreferrer nofollow">announcement</a> at the Bitcoin 2024 conference that he’ll convert all BTC’s owned by the US government through enforcement actions into a “strategic Bitcoin stockpile”.
<h2 id="bitcoin-game-theory-explained">Bitcoin Game Theory Explained</h2>
The report begins by framing BTC adoption within the broader context of game theory, a discipline that evaluates the strategic decisions made by individuals or entities under conditions of uncertainty and competing interests. 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.”
According to the concept of ‘First Mover Advantage’, early adoption of BTC can position nations advantageously on several 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 advantages with the pitfalls of premature regulatory frameworks and the volatility of Bitcoin’s market value, which could pose substantial risks to national economies. The report adds, “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.” <img decoding="async" class="wp-image-632260 size-full" src="https://www.newsbtc.com/wp-content/uploads/2024/07/s-curve-adoption.png?resize=1889%2C1503" alt="S curve adoption" width="1889" height="1503" srcset="https://www.newsbtc.com/wp-content/uploads/2024/07/s-curve-adoption.png?resize=1889%2C1503?w=1889 1889w, https://www.newsbtc.com/wp-content/uploads/2024/07/s-curve-adoption.png?resize=1889%2C1503?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2024/07/s-curve-adoption.png?resize=1889%2C1503?w=768 768w, https://www.newsbtc.com/wp-content/uploads/2024/07/s-curve-adoption.png?resize=1889%2C1503?w=860 860w, https://www.newsbtc.com/wp-content/uploads/2024/07/s-curve-adoption.png?resize=1889%2C1503?w=1536 1536w, https://www.newsbtc.com/wp-content/uploads/2024/07/s-curve-adoption.png?resize=1889%2C1503?w=750 750w, https://www.newsbtc.com/wp-content/uploads/2024/07/s-curve-adoption.png?resize=1889%2C1503?w=1140 1140w" sizes="(max-width: 1000px) 100vw, 1000px" loading="lazy" data-recalc-dims="1">
The ‘Payoff Matrix’—a fundamental tool in game theory—is applied by ASXN to dissect the decision-making process of countries considering Bitcoin adoption for nations. ASXN elaborates on how this matrix helps countries assess the potential returns and risks associated with various strategic choices. “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. <img decoding="async" class="wp-image-632259 size-full" src="https://www.newsbtc.com/wp-content/uploads/2024/07/payoff-matrix.png?resize=1738%2C567" alt="Payoff matrix of Bitcoin adoption" width="1738" height="567" srcset="https://www.newsbtc.com/wp-content/uploads/2024/07/payoff-matrix.png?resize=1738%2C567?w=1738 1738w, https://www.newsbtc.com/wp-content/uploads/2024/07/payoff-matrix.png?resize=1738%2C567?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2024/07/payoff-matrix.png?resize=1738%2C567?w=768 768w, https://www.newsbtc.com/wp-content/uploads/2024/07/payoff-matrix.png?resize=1738%2C567?w=860 860w, https://www.newsbtc.com/wp-content/uploads/2024/07/payoff-matrix.png?resize=1738%2C567?w=1536 1536w, https://www.newsbtc.com/wp-content/uploads/2024/07/payoff-matrix.png?resize=1738%2C567?w=750 750w, https://www.newsbtc.com/wp-content/uploads/2024/07/payoff-matrix.png?resize=1738%2C567?w=1140 1140w" sizes="(max-width: 1000px) 100vw, 1000px" loading="lazy" data-recalc-dims="1">
Furthermore, the report also introduces the concept of the ‘Best Reaction Function’ in the context of Bitcoin adoption, explaining how nations develop strategies by anticipating the decisions 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.
The researchers add how the bandwagon effect could 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 uses several real-world applications to illustrate the theoretical concepts discussed. The case of <a href="https://www.newsbtc.com/news/el-salvador-president-says-country-will-buy-1-bitcoin-a-day/" target="_blank" rel="noopener noreferrer nofollow">El Salvador</a> is examined in depth, showcasing how its early adoption has influenced other nations’ perceptions and strategies towards Bitcoin. The analysis extends to how <a href="https://www.newsbtc.com/bitcoin-news/bitcoin-etfs-added-to-michigan-state-pension-fund-with-6-6-million-allocation/" target="_blank" rel="noopener noreferrer nofollow">Wisconsin’s pension fund investment</a> in Bitcoin ETFs reflects a broader trend of sub-national entities assessing cryptocurrency as a viable component of their financial strategies, and the substantial commitment by <a href="https://www.newsbtc.com/news/microstrategy-500-million-bitcoin/" target="_blank" rel="noopener noreferrer nofollow">MicroStrategy</a> is highlighted as a corporate parallel to national strategies.
Looking forward, the report discusses the potential future trajectories of Bitcoin adoption, influenced by both technological advancements and evolving geopolitical dynamics. It specifically addresses <a href="https://www.newsbtc.com/news/bitcoin/us-buy-619-billion-bitcoin-kennedy-jr-elected/" target="_blank" rel="noopener noreferrer nofollow">Robert Kennedy Jr.’s proposal</a> at Bitcoin Nashville 2024 to acquire 550 BTC daily until the US amasses 4 million BTC, which represents 19% of the total available BTC supply. This approach aims to reflect the proportion of global gold reserves that the US currently maintains in comparison to other countries. <img loading="lazy" decoding="async" class="wp-image-632258 size-full" src="https://www.newsbtc.com/wp-content/uploads/2024/07/gold-reserves-top-15.jpg?resize=1508%2C936" alt="Gold reserves top 15" width="1508" height="936" srcset="https://www.newsbtc.com/wp-content/uploads/2024/07/gold-reserves-top-15.jpg?resize=1508%2C936?w=1508 1508w, https://www.newsbtc.com/wp-content/uploads/2024/07/gold-reserves-top-15.jpg?resize=1508%2C936?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2024/07/gold-reserves-top-15.jpg?resize=1508%2C936?w=768 768w, https://www.newsbtc.com/wp-content/uploads/2024/07/gold-reserves-top-15.jpg?resize=1508%2C936?w=860 860w, https://www.newsbtc.com/wp-content/uploads/2024/07/gold-reserves-top-15.jpg?resize=1508%2C936?w=750 750w, https://www.newsbtc.com/wp-content/uploads/2024/07/gold-reserves-top-15.jpg?resize=1508%2C936?w=1140 1140w" sizes="(max-width: 1000px) 100vw, 1000px" data-recalc-dims="1">
And the Bitcoin game theory is already playing out.&nbsp;“Whilst the ideas Trump presented at Bitcoin Nashville may or may not happen, the simple fact he publicly acknowledged Bitcoin &amp; it’s properties is a win &amp; we are already seeing early signs of the effects of this,” the researchers conclude.
They refer to Johnny Ng, a member of Hong Kong’s Legislative Council, who <a href="https://www.newsbtc.com/news/bitcoin/donald-trump-213239-bitcoin/" target="_blank" rel="noopener noreferrer nofollow">has been advocating</a> for the incorporation of Bitcoin into the city’s financial reserves following Trump’s announcement.
At press time, BTC traded at $66,660. <img loading="lazy" decoding="async" class="wp-image-632262 size-full" src="https://www.newsbtc.com/wp-content/uploads/2024/07/BTCUSDT_2024-07-30_13-34-27.png?resize=3628%2C1675" alt="Bitcoin price" width="3628" height="1675" srcset="https://www.newsbtc.com/wp-content/uploads/2024/07/BTCUSDT_2024-07-30_13-34-27.png?resize=3628%2C1675?w=3628 3628w, https://www.newsbtc.com/wp-content/uploads/2024/07/BTCUSDT_2024-07-30_13-34-27.png?resize=3628%2C1675?w=460 460w, https://www.newsbtc.com/wp-content/uploads/2024/07/BTCUSDT_2024-07-30_13-34-27.png?resize=3628%2C1675?w=768 768w, https://www.newsbtc.com/wp-content/uploads/2024/07/BTCUSDT_2024-07-30_13-34-27.png?resize=3628%2C1675?w=860 860w, https://www.newsbtc.com/wp-content/uploads/2024/07/BTCUSDT_2024-07-30_13-34-27.png?resize=3628%2C1675?w=1536 1536w, https://www.newsbtc.com/wp-content/uploads/2024/07/BTCUSDT_2024-07-30_13-34-27.png?resize=3628%2C1675?w=2048 2048w, https://www.newsbtc.com/wp-content/uploads/2024/07/BTCUSDT_2024-07-30_13-34-27.png?resize=3628%2C1675?w=750 750w, https://www.newsbtc.com/wp-content/uploads/2024/07/BTCUSDT_2024-07-30_13-34-27.png?resize=3628%2C1675?w=1140 1140w, https://www.newsbtc.com/wp-content/uploads/2024/07/BTCUSDT_2024-07-30_13-34-27.png?resize=3628%2C1675?w=3000 3000w" sizes="(max-width: 1000px) 100vw, 1000px" data-recalc-dims="1">

Research Firm Predicts Bitcoin Game Theory In Global Adoption Race

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