Voluntary Provision of Public Goods and Cryptocurrency

Abstract

The purpose of this paper is to show how the mechanism of the reward structure for cryptocurrency mining (known as “Proof of Work†) is applicable to alleviation of the free rider problem for voluntary public goods provision. This paper presents the following results. First, if each individual reports preferences honestly, then the Samuelson condition can hold. It is possible to set an appropriate level of mining. Second, if the scheme (mechanism) offered by our manuscript is introduced, public goods can theoretically be provided at a Pareto optimal level under certain conditions because each rational individual reports true preferences to the government.