Allocating Rights to Mine Blocks

25 Pages Posted: 13 Jun 2018

Date Written: May 28, 2018


This paper studies mechanisms for allocating rights to forge new blocks on a blockchain. The proof of work contest (PoW) where all block generators, or miners, compete for finding the next block is characterized. The central feature of the PoW contest is that no miner has an incentive to participate with multiple identities, a property called sybil proofness. There are several alternatives for the PoW that involve payments and messaging between the miners and the protocol, features that are not used in the PoW contest. A class of mechanisms that generalizes the proof of stake procedure is introduced for allocating multiple rights to carry out the mining of blocks. These mechanisms are characterized by a set of elementary properties. Auctioning the rights to add blocks into a blockchain is also considered.

Keywords: mechanism design, blockchain, auction, contest, proof of work, proof of stake, sybil proof, mining

JEL Classification: C72, D44, D74, D82, G2, L86

Suggested Citation

Kitti, Mitri, Allocating Rights to Mine Blocks (May 28, 2018). Available at SSRN: or

Mitri Kitti (Contact Author)

Turku School of Economics ( email )

Turku, 20014

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