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What Does Asset Ownership in a Digital Future Look Like?

April 13, 2020

Good science-fiction is a vision of humanity’s future. It has a foundation of realism that supports an imaginative story. It’s the step before science and it’s what inventors use to create our actual future. It’s no coincidence that many tech entrepreneurs cite science-fiction as an important influence on how they view the world. Elon Musk said that Douglas Adams, author of The Hitchhiker’s Guide to the Galaxy, is one of the world’s greatest modern philosophers and Jeff Bezos reads sci-fi authors such as Andy Weir, Alastair Reynolds, and Ernest Cline to nourish his mind.

But it works the other way round as well. While science-fiction images the future of humanity, it’s very much inspired by the zeitgeist of the time it’s written in. Sci-fi in the 1960s, for example, centered around space, the final frontier. It was hopeful: humanity spreads throughout the galaxy and beyond. This, of course, was a reflection of the times, when humanity was in a race to land on the Moon. Nothing seemed impossible.

A picture of an astronaut on the Moon
Humanity's greatest achievement

Times have changed since the 1960s, to say the least. We seem to have lost some of the hope we had back then. Our feet are firmly on the ground, stuck in economic crises and a lack of interest in space. Many people hark back to a time when we seemed more interested in exploring space and less interested in creating apps for this or that. As Matthew McConaughey said in 2014’s Interstellar: “We used to look up at the sky and wonder at our place in the stars. Now we just look down and worry about our place in the dirt.”

From Outward to Inward Exploration

However, while there’s certainly some truth to the above sentiment, I think it’s ignoring an increasingly visible trend. Humanity has made major, exponential technological leaps forward. The Internet might not have looked impressive in the 1990s, but look at it now. It has transformed society in only a few decades and it will continue to do so at an ever-faster pace. We haven’t lost our need to explore. But instead of exploring outward, into space to new planets, we’ve explored inward, building digital worlds. Imagination is the only boundary there.

This is already reflected in modern sci-fi. Think of Steven Spielberg’s excellent Ready Player One. Such a scenario isn't that far-fetched anymore. The technology is already there, it just needs to get better. VR is good already, but imagine what it’ll be like in ten years. Imagine how capable AI will be in ten years. Think about voice-powered assistants in ten years. We’ll be able to create and enter new, digital worlds where we can be whoever (or whatever) we like.

Avatars in Ready Player One
Avatars in Ready Player One

Minecraft, World of Warcraft, and Decentraland are all examples of early, already convincing virtual worlds. They’re categorized as games for now, but any virtual world is a game in the sense that it provides a sense of escapism. And there’s no reason to believe that these virtual worlds won’t eventually be used as a way to keep people productive. Virtual HQs accessible through VR already exist, after all.

Additionally, the line between the real world and the virtual world will blur as virtual worlds become more realistic (not in terms of graphics, but in terms of how immersed you are in the simulation) and as reality becomes more augmented. Already, most of us look at the real world through the screen of our smartphones, a device that’s become an extension of the self and an easy touchpoint with the digital world.

A Pokemon seen through the camera of a phone
A picture of the digital merged with the real

Eventually, we’ll all live on a spectrum between the real – the analog is perhaps a better world – and the digital. There will be those who live "off the grid" and who will have zero to little interaction with the digital world. Then it’ll depend on how comfortable you feel with technology and a society that’s drastically different from the one we live in now. Some people will stick to their phones, while others might wear contacts that display information as they look around. At the very end of the spectrum, there will be those who live in the digital entirely, possibly earning a serious living, and who come back to the real world only to satiate biological needs.

There’s no point debating whether such change is good or bad, because it’s inevitable. There are too many technologies moving toward such a future. We won’t be able to change the direction of the wave. All we can do is learn to live with it, or, even better, embrace it. However, there are certain aspects of the merger between the analog and the digital that we can and should actively think about. One such aspect is item ownership.

Ownership is Crumbling

The Internet has drastically affected ownership. How many people that you know still collect physical goods? Stamps? Corks? Coupons? Baseball cards? Young people don’t seem to collect physical goods as much as older generations did. Instead, young people spend time online, on social media, playing their favorite games, browsing the Internet.

The reason why we’ve stopped collecting things is because the Internet has reduced the value of owning the tangible. First of all, we can view rare collectibles online. This, in part, satisfies some of the desire we have to own an item. For example, the picture below is of the most expensive stamp in the world. It took me less than a minute to find online and I didn’t have to pay a penny (let alone $10 million).

British Guiana 1c in magenta color
The British Guiana 1c magenta is reportedly worth $10 million

Secondly, the Internet has allowed entrepreneurs to create technology that’s geared toward renting instead of owning. Why own a car when you can be chauffeured around with Uber? Why buy expensive jewelry when you can find an online shop that rents it for a fraction of the price? Why buy a wedding dress when you can rent one?

While this change in societal behavior might seem harmless, it’s not. In fact, it’s dangerous and will undermine society in worse ways than we can imagine. This is most obvious when it comes to movies, music, and ebooks. We don’t buy any of these. Instead, we stream them. We stream movies on Netflix and we stream music on Spotify. We pay for a subscription that allows us to stream their featured content.

We don’t buy ebooks either. You might think you’re buying them, because you clicked “buy” on Amazon, money went out of your bank account, and the purchased book appeared on your Kindle, but in reality you’re renting the book from Amazon. You don’t own the book at all and Amazon can do whatever they want with “your” book. In fact, in 2009, they removed George Orwell’s books from people’s Kindles without their consent. Many people complained and Amazon hasn’t made similar gaffes since, but the fact remains that they own everything you read on your Kindle, even if you bought it.

A Kindle surrounded by books
Your money, but not your books

It’s a similar story for anything that you buy in games, whether they’re items or coins. They’re not actually yours; they’re the property of the video game company you’re renting it from. Peruse the T&Cs of any big video game company and you’ll find a paragraph in there stating exactly that. All this is possible because digital items aren’t tangible. You can’t hold them, which is the main reason why companies get away with it.

However, as the digital increasingly merges with the analog, this will become a serious problem. After all, private property is one of the central tenets of capitalism. How can people accumulate capital if they don’t own anything? That’s right, they can’t. Within the boundaries of the law, people should be able to do whatever they want with their property, but that’s not the case when you don't really own any of the digital goods you've bought.

It’s a dangerous world where we allow large corporations to own the digital goods we pay them money for and allow them to control the prices of goods they never sell. It’s an awful lot of power and it reduces the chances of budding entrepreneurs rising up to create competition for these large corporations, as they’ll struggle to accumulate capital.

Blockchain Brings Back Ownership

This is one of the main reasons why blockchain technology is so important for our future. An immutable ledger that’s not controlled by any centralized entity gives back ownership to the people. While this might sound somewhat abstract today, it’s undeniably important for any capitalist economy that’s sufficiently advanced. 

People don’t like being at the behest of large corporations and there’s no reason they should be, in their digital worlds. Doesn’t it feel strange to know that Blizzard could easily delete your lvl 80 WoW character and you’d have no legal ground to stand on? You might’ve spent over a thousand dollars on items and coins, let alone thousands of hours, but it wouldn’t matter. Your character would be gone.

World of Warcraft characters waving
Bye, characters!

While I firmly believe that most companies mean no harm, there’s no denying that their primary reason for existence is profit, which they will chase in whatever way they see fit. As such, it’s a risky strategy to spend a significant amount of time or money in anything created by a centralized entity, particularly if you mistakenly believe you own the things you buy and create.

This problem will become increasingly prominent as we integrate with the digital. Our online avatars will become believable extensions of ourselves. Anything that would happen to them would be extremely upsetting. It's a similar story for the objects that we purchase in such a world. You wouldn’t want the virtual Pikachu that walks next to you in the analog world to disappear because Nintendo fell out with Creatures and Game Freak (the other two controlling entities of the Pokemon brand).

Wealth is increasingly created online, but we can’t let that wealth depend on the whims of centralized entities. Full ownership should be given to those who purchase something online or it should at least be made perfectly clear that you’re renting or licensing whatever it is you want to spend money on. 

Blockchain technology is the technical solution to make digital ownership possible. It’s catching on, too. Early experiments with crypto collectible games have proven to be a success. Funding for blockchain startups is up dramatically and. An increasing number of people (yours truly included) have started playing b. Big companies are slowly showing interest in blockchain technology and decentralized gaming.

People like to own digital goods, in part because they’re frequently good investments and in part because it’s still nice to fully own something unique, whether that's digital or not. This is a feeling that will only intensify. Imagine buying some land and a house in Decentraland knowing it’s that it’s entirely yours and that it functions the same way actual real estate does. Its value will go up and down depending on market forces.

Additionally, imagine that you can hang artwork in that house, which you’ve bought somewhere else online. People can come to visit your virtual house and admire that artwork. If you want, you can turn the house into a museum that charges people an entrance fee. This isn’t sci-fi, it’s all genuinely possible.

Blockchain technology allows for the accumulation of capital, because it gives back ownership. It gives entrepreneurs a chance to make money and change society for the better. It allows capitalism to thrive online and stops it from becoming a stale corpocracy where the gap between the wealthy and all the rest widens exponentially. 

We might not have explored space as much as we could have, but we’ve created and discovered a different world instead. It’s a world the richness of which relies only on the depths of our imagination. But we can’t let the goods in that world be controlled by a few companies. Blockchain technology allows for fair ownership and the continuation of capitalism online.

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