Good morning.
I’m Mitsui, a web3 researcher.
Every Saturday and Sunday afternoon, we’ll deliver articles explaining basic vocabulary. We aim to keep each article concise enough for a quick read, while also providing content you can revisit and study.
Today’s topic is “Public Goods.”
Please watch until the very end!
Import
Who owns blockchain? It belongs neither to corporations nor to nations. Anyone can use it, yet no one owns it. The key to understanding this seemingly contradictory nature lies in the concept of a “public good.”
We routinely use various public goods in our daily lives. We walk on roads, breathe air, and connect to the internet. These are not monopolized by anyone; everyone can use them. Yet at the same time, they cannot function unless someone maintains them. Blockchain also possesses this characteristic as a public good. And the method of its maintenance is fundamentally different from that of public goods up until now.
What is a public good?
Public goods refer to goods and services possessing special characteristics in economics. They have two defining features: non-excludability and non-rivalry.
“Non-excludability” refers to the property that someone cannot be prevented from using something. Take roads as an example: you can walk on them without paying a toll, and it is difficult to physically exclude someone. Air is similar; you cannot stop someone from breathing. TCP/IP, the Internet protocol, can also be freely used by anyone, and specific individuals cannot be excluded.
Non-rivalry refers to the property that one person’s use does not prevent others from using the same resource. If you walk down a road, others can walk down the same road. If you breathe air, it does not typically prevent others from breathing. Using the fundamental protocols of the internet does not prevent others from using it.
However, there is a problem here.
Public goods cannot be sustained by market forces alone. After all, who would pay for something everyone can use for free? Building and maintaining roads costs money. Preserving air quality requires environmental measures. Maintaining internet infrastructure demands massive capital investment. But if everyone can use it for free, who will provide the funds to maintain it?
This is the fundamental dilemma of public goods. Everyone needs them, everyone uses them. Yet it remains unclear who will bear the burden of maintaining them.
Why Are Public Goods So Fragile?
Public goods have a structural vulnerability known as the free-rider problem.
Free riding refers to reaping benefits without bearing the costs. You can use roads without paying for their maintenance. You can breathe air without contributing to environmental protection. You can use the internet without contributing to its infrastructure. From an individual’s perspective, free riding is a rational choice. After all, the impact of one person bearing the burden is negligible, and one can expect someone else to shoulder it if they don’t.
But what would happen if everyone thought this way? No one would bear the burden, and everyone would try to free-ride. As a result, public goods would no longer be maintained and would ultimately collapse. Roads would fall into disrepair, the air would become polluted, and internet infrastructure would deteriorate.
This is the phenomenon known as the “Tragedy of the Commons.” Anyone can use it, but no one takes responsibility. Because there is no manager, resources become depleted and the system collapses.
The reason public goods are fragile lies precisely in this structure. Everyone enjoys the benefits, yet no one is willing to bear the costs. And there is no mechanism to prevent free-riding. Unless this problem is solved, public goods cannot be sustainable.
How the Internet Has Been Maintained
So, how has the Internet, as a public good, been maintained?
The Internet has been supported by the division of roles among three main entities: nations, corporations, and open-source software communities.
The state was responsible for investing in basic research and establishing regulations. Companies were responsible for building and operating infrastructure, as well as providing commercial services. The OSS community was responsible for developing and maintaining protocols and software.
However, there is an important underlying structure. Many services that appear free are actually centrally managed.
Google and Facebook provide their services for free. However, in exchange, they collect user data and generate advertising revenue. In other words, while the services are free, users are paying with their own data. And this structure inevitably creates dependence on the platform.
Platform dependency refers to a state where one is forced to rely on a specific company’s services. Data is stored on the platform, networks are built on the platform, and users must follow the platform’s rules. If the platform changes its policies, users have no choice but to comply. If the service ends, they lose everything.
The public nature of the internet has been maintained through this centralized management. As the price for its free access and universal availability, we have accepted a structure dependent on specific corporations.
Blockchain: A New Public Good
Blockchain is one challenge to this structure. It aimed to create infrastructure that anyone could use, transcended borders, and had no central authority.
Blockchain is accessible to anyone. You don’t need to be a citizen of a specific country, nor do you need an account with a particular company. As long as you have an internet connection, anyone in the world can access blockchain. This is true non-exclusion.
Blockchain transcends borders. Bitcoin and Ethereum have no concept of borders. They can be used equally from Japan, the United States, or anywhere else. They require no national regulation or permission. This is their nature as a global public good.
And most importantly, blockchain has no central authority. There are no Google servers. There are no Facebook data centers. Blockchain is maintained in a decentralized manner by thousands, even tens of thousands, of computers around the world. Even if someone shuts down, the system keeps running.
This is a fundamentally different characteristic from previous public goods. Roads have been managed by the state, and internet services have been managed by companies. But blockchain is managed by no one. It is a public good in the purest sense, maintained by all participants.
Why can’t I use it for free?
However, blockchain has one characteristic: it cannot be used for free.
Sending Bitcoin incurs a transaction fee. Executing a smart contract on Ethereum requires a Gas Fee. Why is that? Why is blockchain fee-based when many internet services are free?
The answer lies in the principle that “free = vandalized.”
If blockchain were completely free, what would happen? Everyone would send an infinite number of transactions, flooding it with spam. Massive amounts of meaningless data would be recorded, the network would become congested, and it would ultimately become unusable. This is a classic pattern of resource depletion in a public good.
Blockchain is a limited resource. There are limits to block size and processing capacity. If everyone could use it without restriction, capacity would quickly run out. This is where the concept of price-based usage adjustment becomes necessary.
Gas Fee is a mechanism that determines transaction priority. Transactions paying higher fees are processed first. This ensures that only those who truly need it can use the network, and only to the extent necessary. Unnecessary usage is economically discouraged. Since sending spam incurs significant costs, spam decreases.
In other words, the fact that blockchain incurs fees is not a flaw but by design. It is an essential mechanism for maintaining a public good.
Viewing Gas Fees from a Public Goods Perspective
Gas fees are often called “transaction fees.” However, from the perspective of public goods, they are not fees but maintenance costs.
A fee is a payment made to a company providing a service. Bank transfer fees are compensation for the bank’s service. However, a Gas Fee is not paid to any specific company. It is a mechanism for all users to share the costs necessary to maintain the blockchain infrastructure.
Gas fees primarily serve two purposes. One is the resource allocation mechanism mentioned earlier, distributing limited resources through a price mechanism. The other is as an incentive—rewarding those who maintain the blockchain, namely miners and validators.
This gas fee maintains order on the blockchain. Spam is suppressed, and only truly valuable transactions are recorded. Those who maintain the blockchain receive rewards, giving them the motivation to keep supporting the system.
This is a new model for maintaining public goods. It is neither a state-mandated levy like taxes, nor is it operated by companies for profit. Public goods are maintained through fees paid voluntarily by users. That is the mechanism for public goods on blockchain.
Who is supporting blockchain as a public good?
The three entities that actually support blockchain as a public good are:
First, there are validators and miners. They run their computers to verify transactions and generate blocks. This requires electricity costs and high-performance equipment. However, they receive Gas Fees and block rewards as compensation. This is the direct labor that maintains the blockchain.
Second, there are node operators. They store all transaction histories, participate in the network, and relay transactions. Many of them receive no rewards. They still operate nodes to support the blockchain’s decentralization. The more nodes there are, the stronger the system becomes. This is a volunteer contribution.
Third, developers and the community. They improve the protocol, fix bugs, and propose new features. Often, this is also unpaid labor. Some receive grants, but many participate purely out of interest or belief in the future of blockchain.
These three entities maintain the blockchain by fulfilling their respective roles. There is no unified chain of command like in a corporation. Nor does it possess the coercive power of a nation-state. Yet, through each entity’s voluntary participation and contributions, the system continues to operate.
This is a new way to maintain public goods. Even without a central authority, people cooperate through incentives and a shared purpose. That is the defining characteristic of blockchain as a public good.
Is blockchain succeeding as a public good?
So, is blockchain succeeding as a public good? The answer is, “We don’t know yet.”
The current situation presents numerous challenges. Gas fees have skyrocketed, making usage difficult for many people. Operating nodes requires advanced technical skills, and participation barriers remain high. Validators and miners are increasingly concentrated among a few large entities. This state is far from the ideal of a public good.
Furthermore, the uneven distribution of users is also problematic. Those actually using blockchain are primarily tech-savvy individuals in developed countries. It has yet to reach the people who truly need blockchain—such as those without access to financial services. This raises questions about its public nature as a public good.
However, blockchain still has value. That value has not been lost.
Bitcoin has been operational for over 15 years without a single outage. Ethereum, too, continues to function despite overcoming numerous challenges. Many blockchains have been maintained for years without a central authority. This is truly remarkable.
In a typical company, bankruptcy, acquisition, or a change in direction occurs within 15 years. Even nations see policy shifts when governments change. But blockchain, precisely because it belongs to no one, cannot be stopped by anyone. No one can force changes upon it. It evolves solely through the consensus of all participants.
This is one successful form of a public good. It’s not perfect, but it persists. While challenges abound, it also demonstrates potential. Blockchain may truly be capable of creating public goods independent of nations or corporations.
Summary
Blockchain is not infrastructure that someone else protects for you. It is a public good supported by everyone who uses it, each contributing a little.
Gas fees and decentralization are not inconveniences. They are the costs we pay to maintain this public good. They are essential mechanisms for realizing a public good that persists without relying on central authorities or state coercion.
Blockchain as a public good is still a work in progress. Challenges abound. Yet it also represents new possibilities. Blockchain is exploring what it means to be a public good: owned by no one, usable by all, and supported by everyone.
Whether blockchain, as a public good, will succeed remains to be seen. Yet the very attempt poses a crucial question: Can public goods be sustained without states or corporations? Can society’s infrastructure be supported solely by people’s voluntary participation? Blockchain continues to seek the answer.
Disclaimer：I carefully examine and write the information that I research, but since it is personally operated and there are many parts with English sources, there may be some paraphrasing or incorrect information. Please understand. Also, there may be introductions of Dapps, NFTs, and tokens in the articles, but there is absolutely no solicitation purpose. Please purchase and use them at your own risk.
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🇯🇵🇺🇸🇰🇷🇨🇳🇪🇸 The English version of the web3 newsletter, which is available in 5 languages. Based on the concept of ``Learn more about web3 in 5 minutes a day,'' we deliver research articles five times a week, including explanations of popular web3 trends, project explanations, and introductions to the latest news.
Author
mitsui
A web3 researcher. Operating the newsletter "web3 Research" delivered in five languages around the world.
Contact
The author is a web3 researcher based in Japan. If you have a project that is interested in expanding to Japan, please contact the following:
Telegram：@mitsui0x
*Please note that this newsletter translates articles that are originally in Japanese. There may be translation mistakes such as mistranslations or paraphrasing, so please understand in advance.