  Bitcoin is a digital currency designed to rely on a decentralized, trustless
network of anonymous agents. Using a pseudonymous-address-linking procedure
that achieves >99% sensitivity and >99% specificity, we reveal that between
launch (January 3rd, 2009), and when the price reached $1 (February 9th, 2011),
most bitcoin was mined by only sixty-four agents. This was due to the rapid
emergence of Pareto distributions in bitcoin income, producing such extensive
resource centralization that almost all contemporary bitcoin addresses can be
connected to these top agents by a chain of six transactions. Centralization
created a social dilemma. Attackers could routinely exploit bitcoin via a "51%
attack", making it possible for them to repeatedly spend the same bitcoins. Yet
doing so would harm the community. Strikingly, we find that potential attackers
always chose to cooperate instead. We model this dilemma using an N-player
Centipede game in which anonymous players can choose to exploit, and thereby
undermine, an appreciating good. Combining theory and economic experiments, we
show that, even when individual payoffs are unchanged, cooperation is more
frequent when the game is played by an anonymous group. Although bitcoin was
designed to rely on a decentralized, trustless network of anonymous agents, its
early success rested instead on cooperation among a small group of altruistic
founders.
