As you’ve probably realized by now, we don’t actually own any of our stuff online—Twitter handles, Facebook friends lists, bank accounts, items in video games, event tickets—they’re constantly on-loan from the companies who control the servers that decide how we’re able to access the things we ostensibly own. And these companies taketh away that which they had just so easily giveth.
In 2008 we figured out true digital ownership: the real innovations of blockchain and decentralized consensus, at the core, are true ownership of digital things and truly scarce digital things. The first thing we did was use that digital ownership and digital scarcity to create a digitally native and truly scarce money: Bitcoin.
The use of public key cryptography—replacing username authentication and password authorization—and a coordinated network validating state changes—replacing the central server’s job—is a paradigm shift in how we interact with the digital realm. And that’s what ownership is, really; the right to change something. And now we can own digital things without a central entity allowing us to.
The big question, then, is what does having true digital ownership mean for a society? And, equally, what happens when a society discovers true digital scarcity?
When you consider digital ownership in this context, you realize it’s bizarre that we were ever ok with how we own our digital things today. Would we be ok with owning houses exclusively based on the promises of a homeowners association? That’s the state of digital ownership today: it’s the homeowners association saying “oh yes, you own this house” in blatant contradiction to the license which reads “you don’t have any legal right to this house; we owe you nothing” which you agreed to. When Facebook takes away your house, you don't have the luxury of taking legal action or fighting the algorithm. In the real world we have legal agreements and physical possession backing our ownership; there isn’t a digital equivalent of that on today’s internet.
So what does true digital ownership mean for our online society? We get to reinvent the status quo of how things are owned, giving control back to the owner. True digital ownership goes beyond video game items, though; this ownership and scarcity underpins self-sovereign identity: true ownership of your digital self.
With self-sovereign identity, the rules of the internet change a bit:
No longer do I ask Facebook dot com to “please let me into my account, I am Matt Condon and here’s my password for proof”; now I say “I am Matt Condon” and the world understands it to be so.
No longer do I ask my bank to “please let me send $5 to @soonaorlater, here’s my pin for proof”; now I say, “I am Matt Condon and I sent $5 to @soonaorlater” and the world understands it to be so.
Ignoring the philosophical high ground of self-sovereignty and inherent privacy benefits of being more in control of your online presence, what on earth does digital ownership and digital scarcity provide that the internet today doesn’t?
Let’s look to art for an example. With digital scarcity, artists that produce digital work—which is, by nature, infinitely perfectly reproducible—can be treated like artists working on physical mediums. The bits and bytes that make up a digital work may not be scarce, but the ownership of those bits is, and that’s a powerful shift in how we understand digital art.
Another feature of actually owning your digital things is being able to operate outside of the walled garden of a third-party service: why can’t I sell my in-game items—which I own—to a friend? Why can’t I take the wealth I’ve created in one video game and bring that into another?
This new wave of technology also functions as a reason for otherwise separate businesses to work together—there’s high potential for interoperability between systems, like being able to use the same character across game universes, sharing usernames across social networks, and having a single, canonical source for my data—me.
One interesting note about scarcity in the digital realm is that experiences are crafted by human hands; nothing is given to us for free by the laws of physics. In the real world, to some extent, the value of things can be extrapolated from the sum of the labor required to produce it, based on the rules of the world: if something requires more work to make, we assign it greater value.
This provides an interesting problem for a digital space where there are no resources being consumed and all unnecessary labor inside of the digital realm is nonexistent: how do you architect value? Even if you create a scarce resource like 500 Matt Dollars or 100 collectible Matts, why on earth would anyone want them?
Architecting value is a complex topic, but my favorite way of approaching it is to create organic value: instead of telling people that this collectible is valuable, we create a story, a narrative, and a context around the item—and let people realize for themselves that it’s valuable. This process is very much like art, in a sense, or game design: creating the story and the context in which something can be valuable. Much of art is valued on the context of the artist and much of in-game items are valued in the context of the game: without the story of the artist and a game to play in, these things lose part of their value.
So, then, we must architect a context in which these digitally scarce things can be valuable. When we talk about tokens, the protocol generally serves as context, answering the why: “why do I want this token? So that I can use this protocol”. And even the protocol (ideally!) serves as story and context for some other thing someone might want to do, like renting a house on a house sharing network. Importantly, value is frequently a second-order effect of something else.
For digital things beyond tokens, especially for non-utilitarian collectibles, the context is central to how we value them. A CryptoPunk is just pixels—it doesn’t do anything—but is valuable (to me, at least!) for the story of its existence.
Money is just one of the many things we can own online. With Bitcoin we can truly own our digital money, and with the tech behind Bitcoin, we can truly own everything else we think we own on the internet today.