Bitcoin regulation in vietnam using cooperative game theory to analyse the cost sharing of bitcoin

At present, while the number of Bitcoin investors and exchange market is increasing rapidly, there is no regulation in Vietnam to regulate the issue of this digital currency.. In order t

VIETNAM NATIONAL UNIVERSITY, HANOI

VIETNAM JAPAN UNIVERSITY

VIETNAM NATIONAL UNIVERSITY, HANOI

VIETNAM JAPAN UNIVERSITY

Hà Nội, 2019

(Chữ thường, đứng, đậm, cỡ chữ 14, font chữ Times New Roman)

Secondly, I would like to show appreciation University of Tsukuba and Vietnam Japan University for giving me a chance to participate the master course in Vietnam and Japan

Besides, I greatly appreciate with the continuous support of Office of Global Initiatives, University of Tsukuba in my 3-month internship

Finally, I would like to express gratitude to my family, my friends and my teachers for encouraging me in all the progresses of this thesis

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CONTENTS

ACKNOWLEDGEMENT i

CONTENTS ii

ABBREVIATIONS iii

LIST OF TABLES v

LIST OF FIGURES vi

ABSTRACT vii

CHAPTER 1: INTRODUCTION 1

1.1 Research background and problem statement 1

1.2 Research rationale 2

1.3 Research questions 2

1.4 Research methodology and design 2

1.5 Research limitation 3

CHAPTER 2: LITERATURE REVIEW 4

2.1 The characteristics of Bitcoin 4

2.1.1 Bitcoin value 4

2.1.2 Volatility of Bitcoin price 5

2.1.3 Bitcoin community 6

2.1.4 Bitcoin Mining 6

2.1.5 Exchange market 7

2.2 Bitcoin regulation in the world 7

2.3 Bitcoin regulation in Vietnam 11

2.4 Cooperative game theory and cost allocation 14

CHAPTER 3: RESEARCH METHODOLOGY 20

3.1 Research method 20

3.2 Bitcoin cost sharing model 20

3.3 Cost structure in sharing model 21

3.4 Cost and utility……… …24

CHAPTER 4: FINDINGS AND ANALYSIS 26

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4.1 The result of solutions 26

4.1.1 The proportional cost allocation method 26

4.1.2 The core and Nucleolus method 27

4.1.3 The Shapley value method 31

4.2 Discussion 36

CHAPTER 5: POLICY IMPLICATION AND CONCLUSION 39

5.1 Policy implication 39

5.2 Conclusion 42

5.3 Future research 44

APPENDIX 45

REFERENCE……… 47

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LIST OF TABLES

Table 2.1: The status of crypto asset regulations in the world 10

Table 3.1: Cost and utility of players in High price period 23

Table 3.2: Cost of coalitions in High price period 24

Table 3.3: Cost and utility and player in Low price period 24

Table 3.4: Cost of coalition in Low price period 25

Table 4.1: Equal proportion cost between players (yi) 26

Table 4.2: Conditional cost of players 29

Table 4.3: Terms the amount of x1, x2 and x3 30

Table 4.4: The value of xi solved by Nucleolus method with parameters 30

Table 4.5: The amount of xi (thousand dollars) for each player 30

Table 4.6: Corresponding cost allocation (thousand dollars) between players based on Nucleolus method (yi) 30

Table 4.7: The amount of xi based on Shapley value method in High price period 31 Table 4.8: The amount of xi based on Shapley value method in Low price period 32

Table 4.9: Cost allocation (thousand dollars) between player based on Shapley value method (yi) 33

Table 4.10: Result of solutions in High price period 34

Table 4.11: Results of solutions in Low price period 35

Table 4.12: Percentage of utility received by each player based on solutions concepts in High price period 36

Table 4.13: Percentage of utility received by each player based on solutions concepts in Low price period 36

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LIST OF FIGURES

Figure 2.1: The price of Bitcoin from April 2018 to April 2019 5

Figure 2.2: Regulatory status of Bitcoins Worldwide in 2018 8

Figure 2.3: Coalition forms of players 16

Figure 2.4: The core of coalitional game 17

Figure 3.1: The process of research method 20

Figure 3.2: Bitcoin cost sharing model 22

Figure 4.1: The core – Shapley value – Nucleolus in high price and low price period 33

Figure 4.2: Comparison between cooperative game methods and non-cooperation situation (High price period) 34

Figure 4.3: Comparison between cooperative game methods and non-cooperation situation (Low price period) 35

Figure 5.1: Bitcoin future 43

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ABSTRACT

In 2017, The State Bank of Vietnam has stated that Bitcoin and other digital currencies are not a legal method of payment However, Bitcoin also can be considered as a commodity, asset or investment channel At present, while the number of Bitcoin investors and exchange market is increasing rapidly, there is no regulation in Vietnam to regulate the issue of this digital currency

In order to harmonize the interest of stakeholders, this paper suggests the Bitcoin cost sharing model with cooperative game theory approach to elaborate the incentive why Bitcoin users should cooperate and form coalitions From that, it can help citizen increase the awareness and influence of Bitcoin in new financial environment

Finally, the findings of this study also intended to assist lawmakers, regulators and investigators in regulatory process The study also focuses on educating targeted readers with the deficiencies in current policies, regulations, and legislation as well

as making recommendations for future updates in the regulation of digital currencies

Keyword: Bitcoin, Bitcoin regulation, Bitcoin price, Cooperative game theory.

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CHAPTER 1: INTRODUCTION 1.1 Research background and problem statement

Bitcoin is a digital currency introduced in 2008 by a person called “Satoshi Nakamoto” It’s an open network which allows online payment to be sent directly without a third party, transactions follow a public ledger called blockchain (Nakamoto, 2008) Nowadays, Bitcoin becomes the most widely used and accepted the digital currency Moreover, Bitcoin is considered as the financial products associated with technology but outside of the scope of this research This thesis only deals with Bitcoin at economic approach

Bitcoin users in Vietnam included three main players: investors, Bitcoin miners and businesses that accept exchange in Bitcoins have grown rapidly, from 30,000 users

in 2016 to 60,000 in 2017 and about 300,000 users in 2018 In this context, currently, Bitcoin miners, users and businesses cooperate together to build a sustainable community However, in some cases of conflict of interest, many users have lost money and caused adverse impacts on Bitcoin and social awareness of Bitcoin

In this situation, regulatory authorities have cautioned about the risks related to Bitcoin, as well as the risk of using virtual currency for criminal activity because virtual currency is anonymous, decentralized, and not subject to management of any organization Investment activities, buying and selling virtual money, mobilizing capital through issuing virtual money (ICO), especially using virtual money by multi-level marketing is more and more complicated, threatening to affect financial markets, and can cause huge risks for participating organizations and individuals

It is difficult for investors to recover money because the regulation on Bitcoin has not yet been released When Bitcoin users cooperate together, they must protect their assets and take risks by themselves So Vietnam government need to legitimize Bitcoin in the current Vietnamese context Besides, policies that directly affect stakeholders will also reduce frauds and have a better understanding of Bitcoin These

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policies not only will benefit and protect Bitcoin stakeholders but also help to promote innovation technology in Vietnam

1.2 Research rationale and research objectives

The rationale behind this topic is to consider legalization of Bitcoin which can be used for effective regulation of Bitcoin community; apply Game theory model to calculate reasonable cost in case of price fluctuation The findings suggest that if we manage Bitcoin’s system to reduce its cost practices, the rate of loss of the users and the amount of money in exchange market could be in the acceptable range

With the background and problem statement mentioned above, this study has aimed

to clarify characteristics and mechanisms of Bitcoin market; and suggest solutions and policies to incentivize individuals’ contribution and maximize benefits to the society in Vietnam

1.3 Research questions

Based on research problem, the main research question is:

How can Bitcoin be regulated while harmonizing the interests of stakeholders by applying Bitcoin cost sharing model in Vietnam?

Moreover, some other sub-questions also can be answered in this study:

 What is the Bitcoin’s characteristics and how is Bitcoin obtained?

 How about legal and regulatory issues of Bitcoin in Vietnam and in the world?

 How the Bitcoin cost allocation can be solved using cooperative game theory and which solutions can be used to get consensus between stakeholders?

 Which policies should recommend to manage Bitcoin community in Vietnam?

1.4 Research methodology and design

In order to clarify problem, this research employed both qualitative research and cooperative game theory This thesis firstly provides a conceptual framework of Bitcoin in Vietnam and around the world From this analysis, it is possible to examine the Bitcoin’s characteristics, Bitcoin’s value and suggest the solutions for Bitcoin’s

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stakeholders For these purposes, original models which can describe the interaction between Bitcoin stakeholders and the cost sharing of Bitcoin is developed With qualitative instrument, the secondary data is gathered from policies, documents of the government, company, news and media video

Quantitative method will enable results of game theory model, discussion and comparative analysis The data of Bitcoin price will be collected from official exchange market, price of mining Bitcoin in Vietnam according to the analytical publication Elite Fixtures The costs and utility in the coalitions are stated, after that the solutions concepts also calculated and analyzed in each situation

This research is organized into five main chapters After the introduction, the study will establish the theoretical framework in which, we provide a literature review and define important concepts After which, the thesis will discuss the methodological approach for the research and explain the cooperative game theory concepts and solution methods In chapter four, the results will be calculated in two main periods and compared to non-cooperative situation Lastly, policy recommendations will be suggested based on situation and findings of this research

1.5 Research limitation

The main limitation is a simple case study, which works purely in the information Also, this study cannot to conduct a full empirical analysis Moreover, this research also need to analyze the ability to leave the grand coalition of players in the different situation

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CHAPTER 2: LITERATURE REVIEW

The aim of this literature review is to clarify the understanding and appreciation for the current study In this chapter, the papers relating to Bitcoin characteristic, Bitcoin value, cooperative game theory and Bitcoin regulation will be reviewed After this progress, the research model will be established and the policy implication could be found

2.1 The characteristics of Bitcoin

Bitcoin is new phenomenon, so that many papers explained the Bitcoin characteristics Bitcoin is the first decentralized cryptocurrency, its transaction cannot be forged and the amount of Bitcoin is limited (Nakamoto, 2008) This first document published by Satoshi Nakamoto describe how the Bitcoin network works

Bitcoin have many advantages (Mirzayi, 2017) It eliminates transaction costs, is safer than cash, harder to fake than fiat currency The potential of Bitcoin outweighs the threats (Alcorn, Eagke, & Ethan, 2014), however Bitcoin users also need to know more detailed about the risks that can happen It is not accidental that many financial experts oppose Bitcoin, many countries banned Bitcoin, some countries accept Bitcoin like Japan and Canada but are extremely cautious The use of Bitcoin is a medium for illegal activities to transmit proceeds locally or globally (Bryans, 2014) The difficult of definition Bitcoin’s value make many users lose money when they speculate Bitcoin or invest to scam projects Therefore, regulators and investigators struggled with Bitcoin and the problems associated with this new form of electronic value transfer system (Ajello, 2015)

Bitcoin value

Bitcoin is an emerging technology based on complex technology In addition, Bitcoins are not regulated by a centralized agency till date, make them less reliable and it is difficult to evaluate Bitcoin value To invest in Bitcoin, users must believe

in the Bitcoin security, trust any organizations involved, such as wallet services or

Volatility of Bitcoin price

Bitcoin price fluctuates dramatically and depends substantially on public sentiment (Thies & Molnár, 2018) The large fluctuation has caused many economists to questions the viability of Bitcoin In December 2017, Bitcoin prices peaked at over

$ 20,000, and only a week later hit bottom at $ 10,000, which could cause huge losses for investors In January 2019, Bitcoin has lost about 80% value from its peak

Figure 2.1: The price of Bitcoin from April 2018 to April 2019

Source: coindesk.com

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However, in 2018 and 2019, figure 2.1 shows that Bitcoin price have relatively stable periods From 6/2018 to 11/2018, the average price is about 6.5 thousand USD From 12/2018 to 4/2019, the average price is about 3.6 thousand USD

Bitcoin community

In order for Bitcoin to exist, form and exchange, it is necessary to focus on three factors: (1) Miners; (2) Businesses; (3) Investors Besides, in order to develop a flawless system, developers’ contribution is crucial They try to solve bottlenecks and threats, and develop methods to apply in the future

There are three ways to get Bitcoins when users join network (Murphy, Seitzinger, & Elwell, 2015) First, users can obtain new Bitcoin by serving as miners Second, users can exchange money (e.g., dollars, yen and Vietnam dong) for a fee on exchange market (e.g., Remitano, Coinbase and Binance) by using credit card The exchange fee depends on the value of transaction Third, users can receive Bitcoin in exchange for the sale of goods or services with other businesses

Miners play a very important role in Bitcoin ecosystem, they secure integrity of coins and business model, as well as confirm the existence of Bitcoin in the network Mining decentralization is crucial to keeping consensus between players and everyone’s Bitcoins safe Businesses are organizations which provide exchange service, make coins more accessible, increase adoption and face new regulation Finally, investors are holders and users who affect the demand and supply of Bitcoin, they also create value circulating Bitcoin in the economy, more value creation and wider adoption

Bitcoin Mining

The term "Bitcoin mining" refers to individuals or organizations that use their devices

to search for Bitcoin units to own and earn Bitcoin mining is worked by the specialized computer This process is the backbone of Bitcoin network The mining

of Bitcoin based on Blockchain technology, it is easy to understand that all of these activities will be recognized by the global network of computers, so it is difficult to

On the other hand, it is the desire to maximize profits from mining, which has promoted the field of information technology to develop more to strengthen the system of excavators, and develop clean energy sector (like using solar power) to get the lowest energy consumption cost

Exchange market

The Asia-Pacific region accounts for the largest proportion of Bitcoin in the world (50%), followed by North America (Rauchs, 2017) Meanwhile, storing Bitcoin electronic wallet in Europe accounts for the largest proportion (42%), followed by North America (39%)

Bitcoin trading company provide services to buy, sell electronic currencies and other digital assets, exchange units are currencies in the world The exchange market plays

a central role in the existence of electronic money, because it provides trading locations, creating liquidity as well as price setting mechanisms for these currencies The first trading platform was established in 2010 (Mt Gox) to create a platform for investors of Bitcoin trading, so far, there have been hundreds of trading company established, can include some big businesses like Binance, Kraken, OKcoin, Coinbase, Huobi etc

2.2 Bitcoin regulation in the world

The situation of Bitcoin in the world can be summarized in the figure 2.2:

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Figure 2.2: Regulatory status of Bitcoins Worldwide in 2018

Source: https://coin.dance/poli

Figure 2.2 highlights Bitcoin regulation around the world Using color, a range of Bitcoin legacies shows different levels of acceptance around the world Firstly, green countries are legitimate Bitcoin markets, such as Canada, United States, Australia and etc Orange represents neutral markets that are not fully legalized Bitcoin, but there are some announcements regarding the use of electronic money Light pink countries with limited Bitcoin markets may have red tape, regulations and government efforts

to slow down the use of electronic money The dark pink country represents the markets where Bitcoin has been made completely illegal and criminalized Finally, some countries have yet to comment on the legitimacy of Bitcoin, expressed in gray Eastern countries seem to close with Bitcoin more than their Western counterparts Russia is currently the largest country to legalize Bitcoin However, China and South Korea are the latest two countries to strengthen inspection and regulation of using Bitcoin This has led to a recent sell-off in the electronic money market, as China and South Korea are two important hotspots that have contributed a lot of liquidity to Bitcoin market

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North America and Western Europe are the most accepting areas for Bitcoin The Middle East seems very divided on the topic of Bitcoin Interestingly, Iraq, Iran and Turkey are legitimate Bitcoin markets, while Afghanistan, Pakistan, Saudi Arabia and Egypt have different levels of restrictions on digital currency

There are 112 (45%) countries with unrestricted Bitcoin laws, out of 251 Nearly 8%

of countries in the world, have limited or illegal Bitcoin 47% of the world has not yet commented on Bitcoin and the legality of its use in their countries This is a risk for Bitcoin, because some of these undecided countries may eventually decide to set restrictions on market

In general, most of the world has not yet commented on the legitimacy of Bitcoin The emerging industry is still not fully understood by global managers, which may explain why some countries have not yet commented on this movement As time goes

by, countries that remain on the sidelines will eventually come up with a set of rules for approving Bitcoin, or operating illegally Bitcoin increases the popularity level continues to exceed expectations, but not all countries will see electronic money in a favorable light

Table 2.1 demonstrates the way other country around the world regulate Bitcoin According to statistics from Binance Company, there are five factors related to Bitcoin regulation: crypto exchanges, ICO, crypto payments, conversions from digital currencies to fiat currencies; and plan to increase cryptocurrency regulation

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Table 2.1: The status of crypto asset regulations in the world

Are crypto exchanges banned, regulated

or do they operate in a gray area?

Are ICOs banned, regulated

or do they operate in a gray area?

Are crypto payments banned?

Are conversions from virtual currencies

to fiat currencies banned?

Is there any planned legislation

to increase crypto regulation?

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Source: data compiled by Bloomberg, released in March 26, 2019, updated by Binance

2.3 Bitcoin regulation in Vietnam

Legal framework related to Bitcoin

According to Clause 6, Article 6 of Decree No 101/2012 / ND-CP amended and supplemented by Decree No 80/2016 / ND-CP stipulating prohibited acts: “6 Issuing, supplying and using illegal payment instruments” Therefore, the supply and use of illegal payment instruments such as Bitcoin virtual currency is prohibited

Currently, the issuance, supply and use of Bitcoin as a method of payment can be handled for administrative violations with a fine of between VND 150 - 200 million

2017

Moreover, on 11 April 2018, the Prime Minister issued Directive 10 / CT-TTg in

2018 to strengthen management of activities related to Bitcoin

Vietnam Still Undecided About Cryptocurrencies

Vietnamese authorities are still delay the released documents to regulating Bitcoin The Ministry of Justice of Vietnam has submitted a report to the government with an assessment of the current law and assessment of business activities related to digital money in Vietnam

The report proposes three alternative policies to be applied in different regions of the world The first approach, which is referred to as “Floating”, involves implementing

a relatively loose regulatory regime The second option is called “Prohibition”, and the third is legalizing digital asset transactions under clear conditions

The relevant ministries and departments will establish an appropriate legal framework for managing Bitcoin This regulation should balance the risks and potentials related to Bitcoin to ensure that investors benefit from it and support the development of electronic money technology in general

Trade Ministry banned on imports of mining equipment

Electronic money mining has become a source of income for many Vietnamese companies and citizens, but the digital money mining business is not really popular with the Vietnamese government In 2018, the Ministry of Finance proposed to suspend the import of mining equipment - measures that the State Bank of Vietnam

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and the Ministry of Public Security supported According to statistics from the General Department of Vietnam Customs, more than 27,000 mining components were imported into Vietnam in 2017 and over 15,000 in the first five months of 2018 Digital currency has arrived in Vietnam when some services in Ho Chi Minh City start paying with Bitcoin ATM Bitcoin has been installed in this city, allowing users

to withdraw cash and buy electronic money (Nguyen, T.N.Y, 2017)

Vietnamese people are one of the most active electronic money users, especially bitcoin, along with Japan and Korea Data from SimilarWeb in 2017 shows that Vietnamese investors are ranked top of Remitano exchange market, and second on CoinMarketCap.com and Bittrex platform

The reasons why Vietnam government do not accept Bitcoin as a payment method

First, Bitcoin is not currency and cannot be considered as money because the money must be made by the central bank Fluctuations of money affect the balance of payments, commodity prices as well as other currencies However, Bitcoin do not have the above characteristics

Second, the level of risk is high According to research by private company ICO Satis Group, it is estimated that in 2017, approximately 78% of ICO projects are frauds, 4% fail, 3% are dead and only 15% of projects are taken on the market

Third, Bitcoin is a technology product from Blockchain which is a new technology All transactions are anonymous and have security, high confidentiality Therefore, many people worry that Bitcoin can be a money laundering tool of crime

Fourth, the law does not recognize Bitcoin Currently the law does not recognize it as

a means of payment, but the transaction, buying and selling it as an asset is still happening in Vietnam

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2.4 Game theory in Bitcoin and cost sharing model

Game theory is a set of analytical tools designed to model interdependent situations,

in which each player's logical behavior not only affects his or her own interests and losses, but also impact others Allocation cost of Bitcoin involves interaction between multiple stakeholders, so that game theory is consistent with cost-sharing model Each player in the Bitcoin community has different benefits and investment costs For miners, they try to maintain their system to gain profits when Bitcoin prices rise, while businesses want to have a stable amount of Bitcoin to use for many different purposes The remaining investors tend to speculate and trade when there is a change

in prices In the Bitcoin community, stakeholders can form very different game forms, non-cooperation, cooperation, partial cooperation

This study applies cooperative game theory to analyze the cost sharing between agencies in Bitcoin community The cooperative game theory approach has emerged

as an effective, fair-minded approach to providing adequate incentive to motivate stakeholders in community (Ray et al., n.d.) Recently, the game theory method has been used as an effective framework for making decisions on a number of issues and conflicts in Bitcoin inter-group Application of cooperative game theory has been used in Bitcoin mining (Lewenberg, Bachrach, Sompolinsky, Zohar, & Rosenschein, 2015), game theoretical methods in human-machine (Liang & Yan, 2017) Because the methods from cooperative game theory is appropriate for the context like the Bitcoin exchange market, the main purpose of this study is to provide relevant user data to assess the costs they are expected to incur in a cooperative game

Quantitative and qualitative methods have been proposed to evaluate Bitcoin value and manage Bitcoin as: Bitcoin analysis from investor’s perspective (Thesis, Economics, & Schut, 2017), Estimate Bitcoin price using machine learning (Velankar, Valecha, & Maji, 2018), Determinant of Bitcoin price (Sukamulja & Sikora, 2018), Bitcoin regulation and investigation (Fawcett, 2016), Analysis legal issues (Murphy

Bitcoin is a new digital currency from 2008 so the papers relating to application game theory in Bitcoin have been reviewed, such as: Applications of game theory in Blockchain (Z Liu et al., 2019); Energy consumption in Bitcoin mining (Singh, Dwivedi, & Srivastava, 2018); The Bitcoin mining game (Houy, 2014)

The initial concepts of “Cooperative game theory” and “forming coalition” was introduced in some research related to technology adoption (F Liu, Dedehayir, & Katzy, 2015); Moreover, the concepts of solution “Shapley value”, ‘‘Nucleolus” and

“The Core” could be found in the research “Game Theory” (Qu H.V, 2015), water resource management (Valinejadshoubi & Shakibabarough, 2013)

This study aims to develop a Bitcoin cost sharing model In particular, we care about the conditions that ensure that grand coalition is the best priority for all players Fair axioms are used to provide some theoretical results that the study applies to this model

Transferable Utility Games

A coalition game with transferable utility (TU game) is a pair (N; v); such that N= {1,2…n} is a finite set of players A subset of N is called a coalition S ⸦ N (included) the collection of all coalition is denoted by 2N (Maschler, M., Solan, E., & Zamir, S., 2013)

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Set N = {1, 2 … n} be the set of players and 2N be the set of coalitions (subsets of N)

A cooperative game in N is defined by its characteristic function u: 2N → R, which assigns to each coalition S ⸦ N a real number u(S)

For example, N = {1,2,3} is the set of players and a subset of N is called a coalition

be transferred between players

Figure 2.3: Coalition forms of players Figure 2.3 performs a value function in cooperative game among three players and the overview of the value of coalitions of the 3 players

The solution concepts

In cooperative game theory, the solutions are concepts which ensure the fairness for player when they form grand coalition

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The core of grand coalition is the set of action of the grand coalition N that are not

blocked by any coalition An imputation X (x1; x2; x3) is in core if and only if the following inequalities:

Figure 2.4: The core of coalitional game

 The Shapley value

Shapley's value distribution method is a normative allocation concept that is often considered a reasonable way of dividing benefits from cooperation As a consequence

of the definition of four attractive axioms: Symmetry, Null, Effective and Additivity (Shapley, n.d.) Symmetric conditions mean that the allocation does not depend on when the player joins the game Null player condition means that a player has a marginal contribution to any alliance given zero value

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Shapley value Φ (N, v) is the most commonly used solution in cost sharing games This value satisfies efficiency, fair, symmetry and marginal contribution (Shapley, 1967)

 Nucleolus

The Nucleolus is the costs based on the principle to “minimize the maximum dissatisfaction” It provides a results within the core in case the core is non-empty Nucleolus is the solution first proposed by Schmeidler (1969) to minimize the dissatisfaction among the coalition – fair allocation rule Example, if there are three players, we have the equation:

E(S, x) = v(S) – x(S) and e ({1,2}, x) = e ({1,3}, x) = e ({2,3}, x)

 Proportional split

Proportional split is the basic concept It bases on the cost contribution of each player

to share the utilities

Ci = ∑Ci /N

Concepts of fairness

Firstly, some idea of fairness will be introduced that related concepts

 Cost are shared equally and proportionally based on contribution

 Individual rationality – no player is allocated a cost greater than independent costs

 Coalition rationality means that no sub-coalition is allocated costs larger than its independent cost

 Group rationality mentions that the grand coalition’s cost is smaller than the sum of all players’ costs

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 Costs are allocated based on each player’s contribution to the efficiency improvements in the forced cooperation

 Minimized dissatisfaction is to minimize the maximum dissatisfaction

among the players

With individual rationality, the possible allocations for the grand coalition is the set

of imputations

Using the concepts of imputations and core from a fair perspective is obvious, but it does not provide allocation, but an assessment tool Therefore, the value of Shapley and Nucleolus provides accurate distribution, because they are often considered to lead to fair allocation based on certain assumptions and axioms, moreover, it is assumed that Shapley values and Nucleolus is the most appropriate distribution method for problems of the type mentioned in this study

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CHAPTER 3: RESEARCH METHODOLOGY 3.1 Research method

Cost sharing process for purchasing Bitcoin between miners, businesses and investors

in different coalitions have been established The core, Value Shapley, Nucleolus and traditional methods such as proportional division were used in this study as a cost-sharing method Different types of players' coalitions have been considered to assess fairness in cooperation among players in different price situations The data in this research such as Bitcoin mining cost, Bitcoin price and brokerage fee are collected in Vietnam and in the Bitcoin market

This figure will point out the process of research method

Figure 3.1: The process of research method

3.2 Bitcoin cost sharing model

Given that in the Bitcoin market there are 3 main investor groups: Miners, Businesses and Investors All these players want to obtain Bitcoin, but the way to get their Bitcoin

is different Miners is the group who use computers and software that they invest to

Confirm the form of game: Cooperative game theory,

Bitcoin Cost sharing

Determine players: Miners (1); Businesses (2);

Investors (3); Cost Function

Find solutions: the Core, proportional, the Shapley

value, Nucleolus

Compare and discuss the results

Suggest the solutions and policy implication