Free-Rider Problem

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The Free-Rider Problem occurs when individuals benefit from resources, goods, or services without contributing to their cost. In decentralized networks, especially linked to blockchain, this can manifest when certain users rely on others for transaction verification and network maintenance while avoiding their share of the costs.In practice, this means some participants may choose not to engage in mining or validating transactions, instead depending on those who do. This reliance can lead to a situation where the burden of maintaining the system falls on a smaller group, making it less sustainable over time.The issue may undermine the incentive structure that encourages participation in the ecosystem. If enough individuals opt to free-ride, the network could suffer from reduced security and efficiency, impacting all users. Solutions often involve creating economic incentives or mechanisms that ensure that all users contribute fairly to the system’s upkeep and benefits.

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