P+ε attack on the Koch brothers

Disclaimer: This is not about politics, but about game theory and recent developments in the cryptocurrency world. And a bit about politics.

The Golden Age of Lobby

This week’s announcement that the Koch brothers backed advocacy groups aim to spend almost a $1 billion on the 2016 elections stirred quite some concerns about disproportionate influence of lobby on the US political system.

On the bright-side, I guess it is nice that there still are Moore-like trends in contemporary economics – $1 billion is more than doubling the money spent on lobby during the 2012 elections. 100% growth in 4 years, and able to employ at least $1 billion at positive expected return? Sign me up!

John Stewart explains, that it is “grotesquely unfair to paint the Koch brothers as nefarious billionaires.” They are more like “benevolent god-kings”.

Buffet’s Billionaire’s Buyout Plan

Still there are many killjoys around, who think that political lobby is a poison in the veins of the democratic process. Warren Buffet, a fellow billionaire (and apparently a billionaire backstabber) proposed several years ago a reactionary solution – to return to effectively pre-1978 lobbying rules:

Suppose that a reform bill is introduced, raising the limit on individual contributions to federal candidates from $1,000 to, say, $5,000 but prohibiting contributions from all other sources, among them corporations and unions. These entities could still encourage their employees, stockholders, or members to contribute personally, but could do no more […]

Fortunately, no bribe-affine politician in his right mind would agree with this! No worries, this will never pass through Congress. Except that Buffet has some Jedi-level game theoretic trick up his sleeve:

Well, just suppose some eccentric billionaire (not me, not me!) made the following offer: If the bill was defeated, this person — the E.B. — would donate $1 billion in an allowable manner (soft money makes all possible) to the political party that had delivered the most votes to getting it passed. Given this diabolical application of game theory, the bill would sail through Congress and thus cost our E.B. nothing (establishing him as not so eccentric after all).

Emphasis mine. Think this carefully through, it’s a beauty.

P+ε attack on Bitcoin

This week also brought Vitalik Buterin’s reworking of Andrew Miller’s SchellingCoin attack for Bitcoins. And in fact this attack is isomorphic to Buffet’s trick! There are some interesting implications too:

Hence, from a cryptoeconomic security standpoint, one can in some sense say that proof of work has virtually no cryptoeconomic security margin at all […]

Proof-of-stake vs. proof-of-work is one of the most controversial topics in the cryptocurrency world and this finding undermines some arguments on the side of the proof-of-work. Will be interesting to follow

PS1: Incidentally, net_worth(Buffet) ≈  net_worth(Charles Koch) + net_worth(David Koch). Maybe going for a good old 51% attack?

PS2: More Buffet game theory goodness: Buffett’s $1 Billion Bracket Bet.

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