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Open Access

Bitcoin Price Manipulation Regulation from a Game Perspective

Yingxin Gao1, Yanmei Zhang1( ), Zheng Lin1, Aihua Jiang2
School of Information, Central University of Finance and Economics, Beijing 100081, China
School of Taxation, Central University of Finance and Economics, Beijing 100081, China
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Abstract

Frequent price manipulation in the Bitcoin market will lead to market risk and seriously disrupt the financial order, but there is less research on its regulation. We address the Bitcoin price manipulation problem by building a regulatory game model. First, we study the price manipulation mechanism of the Bitcoin market based on behavioral finance and clarify the boundary conditions. Second, we introduce regulator constraints and establish a game model between the manipulator and the regulator. Further, through variable deconstruction, parameter verification, and simulation analysis, we explore how to achieve effective regulation of Bitcoin price manipulation. We find that the effective regulation of Bitcoin price manipulation can be achieved in three ways: (1) Adjust the penalty coefficient with a certain lower threshold so that the manipulator’s expected return is negative; (2) Set the lowest possible price fluctuation standard while ensuring that it does not interfere with market-based transactions; (3) The simulation of price manipulation regulation is optimized and most efficiently controlled when the probability of investigation is dynamically adjusted by a concave function on the price fluctuation standard.

Keywords

Bitcoinprice manipulationgame modelbehavioral financefinancial regulation

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Journal of Social Computing
Volume 4 Issue 4,
December 2023
Pages 382-397
DOI: 10.23919/JSC.2023.0027
Cite this article:
Gao Y, Zhang Y, Lin Z, et al. Bitcoin Price Manipulation Regulation from a Game Perspective. Journal of Social Computing, 2023, 4(4): 382-397. https://doi.org/10.23919/JSC.2023.0027

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Received: 30 June 2023
Revised: 13 December 2023
Accepted: 17 December 2023
Published: 31 December 2023
© The author(s) 2023.

The articles published in this open access journal are distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/).
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