Auctions with Tokens

In a repeated, private-value auction with risk-neutral bidders, the auctioneer can decide to accept payments in a blockchain-based token that he creates and initially owns. I show that, if the time horizon is finite, then the present-discounted value of expected revenues is the same whether payments occur in tokens or in dollars (or any other fiat currency). However, revenues will accrue earlier and be less variable in the auction with tokens. In particular, if the auctioneer commits to destroying all tokens received back as payment, then he will earn the present-discounted value of the future expected revenues at the beginning of the game with probability 1. If the time horizon is infinite, then financial bubbles on tokens are possible, in which case the auctioneer's expected revenues will be larger than in the auction with dollars. As an extension, I introduce a cash-in-advance constraint and show that the auctioneer strictly prefers using tokens to using dollars, because within each period revenues accrue earlier with tokens than with dollars (when selling tokens vs when selling the object).