How to use Blockchain Funds for Public Goods


What Are Public Goods and How Do They Work?

It can be defined broadly as an initiative that helps the entire community. A public good must ensure that: it does not prevent certain groups of people from benefiting from the project, and it does not grow less accessible to some groups of people as it becomes more accessible to others.

The following are some instances of public goods:

  • Open-source software for scientific research
  • Mitigation of climate change
  • Infrastructural development (e.g. bridges, public parks, etc.)
  • Defense of the nation

Scientific research for vaccination, for example, satisfies both requirements for the public good. To begin with, it does not target specific groups of people; rather, it strives to promote the general public's health. The vaccination developed as a result of the study is made available to everyone. Second, making the research available to one group does not preclude it from being made available to others.


Your home is an example of a non-example. Only you and the people who live in your house get to call it home. I can't just walk into your house and pretend to live there. Your property rights protect you, thus I'm not allowed to benefit from your home in the same manner you do. Furthermore, because you own the house, it is impossible for me to own it. If you already own it, your house is not available for me to buy, making it a competitive good.


So, What Is the Importance of Public Goods?

Because scientific advancement is a public benefit, as Vitalik so eloquently phrased it, "chances are, you'd probably be dead of some silly disease by now" if it weren't for public goods. Public goods are "critical to society's smooth operation". They're necessary for intellectual and cultural advancement. Another distinction to be made is that a public good is not the same as charity. Charity is intended to assist a specific person or community, whereas public goods can be created on the spur of the moment and benefit everyone without discrimination.


Volunteering at your local food pantry, for example, is a kind gesture, but it is not a public good. You are alone in benefiting the particular community that relies on the food pantry.

Public goods can be created on purpose, such as when a contractor constructs a public bridge. Public goods, on the other hand, can be created by accident. For their own goods, software businesses, for example, may develop their own tooling and programming languages. Then they decide to open source it, thereby making it a public good because anybody can use and benefit from open-source software. The software wasn't designed with the goal of becoming a public good.


The Problem with Public-Goods Funding

When it comes to funding public goods, there are two considerations to consider.

Despite the importance of public goods, finding a mechanism to support them that serves the broader public's interests is difficult. Despite the fact that public goods are designed to benefit the general public, they are frequently funded by a small number of people who have their own interests, beliefs, and agenda, such as businesses supporting scientific research.

Small organizations are given a lot of control over society's intellectual and cultural advancement when they sponsor public goods.


Another issue is that those who create public goods are frequently underpaid.

There is a dilemma known as the "free-rider problem" when it comes to finding things. People frequently rely on others to contribute to the funding of public goods because they benefit everyone equally. For example, there was a time when Vitalik would only write articles for $1000 if he was paid. Often, a single person provided half of the financing for the piece. The item was published whether one person paid $1,000 or a thousand others paid $1. Why would you pay if you know that someone else will pay your half of the contribution?

As a result, even when the public is interested in public goods, they are frequently underfunded.


Blockchain as a Public Goods Funding Mechanism

Blockchain technology is a cryptographically secure distributed ledger system that enables people to make democratic decisions.


Users can use cryptocurrencies or tokens to fund initiatives on the blockchain. Smart contracts on blockchains use incentive structures to automatically coordinate the public's interests. Several organizations are using blockchain to support public goods, but their incentive structures are quite different.



Blockchain offers a promising way to fund public goods in a way that reflects the public's interests while also fairly paying the creators of public goods. While these organizations are not the only ones working on public-goods funding options, they were the ones that caught my attention first. Given the length of the article, the processes of incentive structures were explained at a very high level.


We hope that this blog post will be beneficial for you. We will continue to create useful works in order to get inspired by everyone. We are sure that we will achieve splendid things altogether. Keep on following Finage for the best and more.

You can get your Real-Time and Historical Cryptocurrency Data with Finage free Crypto Data API key.

Build with us today!

Start Free Trial