Sustainable Proof-of-Work Cryptocurrency Incentives
- Pianese F.
- Sarkar S.
- Signorini M.
Abstract The design of a successful distributed system for enabling payments and micro-transactions among Internet users has long been a major challenge in applied computer science. Bitcoin, the first successful cryptocurrency, suffers from sustainability problems, such as inefficient energy expenditure for its network operation, and from perverse incentives that foster speculative behavior. We introduce a novel incentive mechanism that discourages currency hoarding and aims for long-term sustainability, allowing margins of profitability for the contributors to the system while ensuring convergence of the cost of performing transactions towards the actual cost of the resources engaged in their execution.