Viewpoint: Analyzing from the perspective of the gaming environment, why is a Bitcoin spot ETF about to be approved?
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Viewpoint: Analyzing from the perspective of the gaming environment, why is a Bitcoin spot ETF about to be approved?
Pricing power in the crypto market currently lies with Wall Street, and the financial market environment in the United States where Wall Street operates is more conducive to adopting a survival strategy based on trust and cooperation.
Navigating Web3 tides with focused insightsAuthor: NingNing
Different financial markets have different game environments, and in these varying environments we should adopt different survival strategies.
Currently, Wall Street holds pricing power in the crypto market, and the U.S. financial market environment where Wall Street operates is one better suited to a survival strategy based on trust and cooperation.
Below, we use the classic game theory simulation "The Evolution of Trust" to model and compare the financial market environments of the United States and China, and to verify why trust and cooperation are superior survival strategies within the U.S. financial context.
1. First, let’s introduce the player types participating in our simulation:
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Copycat: Starts by cooperating; thereafter, copies the opponent’s previous move;
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Always Cheat: Never cooperates, always defects;
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Always Cooperate: Always cooperates, always trusts;
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Grudger: Starts by cooperating; once cheated, never cooperates again;
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Detective: Begins with cooperate-defect-cooperate-cooperate to test the opponent; if the opponent ever defects, becomes a Copycat; if the opponent keeps cooperating, turns into Always Cheat.
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Fuzzy Copycat: Similar to Copycat, but only starts copying the opponent's strategy after being defected against twice in a row;
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Hardheaded: Starts by cooperating; if opponent cooperates, cooperates next round; if opponent defects, defects next round. Hardheaded allows zero tolerance for any mistake by the opponent;
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Random: Cooperates or defects randomly.
2. Next, define the game environment. The parameters available in "The Evolution of Trust" include:
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Player Composition: Customize the proportion of each player type;
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Payoffs: Define gains/losses for cooperate-cooperate, defect-cooperate, and defect-defect outcomes;
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Rules: Set number of repeated rounds per game, elimination mechanism, and error tolerance.
We set the simulation parameters for the U.S. financial market environment as follows:
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Player Composition: Copycat 4, Always Cheat 4, Always Cooperate 3, Grudger 3, Detective 3, Hardheaded 3, Fuzzy Copycat 0 (Confucian benevolence doesn't exist in the U.S.), Random 5;
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Payoffs: Cooperate-Cooperate = (3,3), Defect-Cooperate = (2,-1), Defect-Defect = (0,0);
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Rules: 10 repeated rounds per game, bottom 5 players eliminated and top 5 reproduced after each game, error tolerance set at 5%.
As shown in the simulation result, after 9 rounds, only the Always Cooperate ("Forever Pink") players remain.
Now, let's mischievously simulate the Chinese financial market environment. We set its parameters as follows:
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Player Composition: Copycat 4, Always Cheat 5, Always Cooperate 1, Grudger 5, Detective 5 (Chinese are shrewdest), Hardheaded 2, Fuzzy Copycat 0 (Confucian virtue no longer exists in modern China), Random 3;
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Payoffs: Cooperation rewards are limited in China's financial markets, while deception brings greater benefits. Cooperate-Cooperate = (2,2), Defect-Cooperate = (3,-2), Defect-Defect = (0,0);
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Rules: 10 repeated rounds per game, bottom 5 eliminated and top 5 reproduced after each game, error tolerance at 5%.
As shown in the simulation result, after 10 rounds, only the Grudger players remain—those who, once deceived, will forever retaliate and never trust again.
In conclusion, in the crypto market I choose to be an Always Cooperate ("Forever Pink") player—trusting information released by institutions like Bloomberg and BlackRock. In the A-shares market, I choose to be a Grudger—I may let you deceive me once, but afterward I will never believe or cooperate with you again. That’s what they call “ministers deceiving emperors with utmost devotion” 😂
The above is purely personal opinion and not investment advice.
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