Blockchain and the Road Ahead for Digital Property Rights
Amid Blockchain’s rapid ascension as an emerging technology, concerns continue to surface about antiquated property rights laws that provide little or no direction in terms of how digital assets are to be addressed. Moreover, software used on devices to facilitate digital transactions are often tethered to user agreements that few, if any consumers, ever read. As a result these users are often unaware of uncertainties surrounding the ownership and property rights associated with their assets.
In his recent book entitled “Owned: Property, Privacy, and the New Digital Serfdom” by Cambridge University Press, Joshua A. T. Fairfield an internationally recognized law and technology scholar, specializing in digital property, electronic contract, big data privacy, and virtual communities offers some fresh perspectives on the intersection between digital property rights and the blockchain.
Fairfield believes that the advent of new digital technologies is leading to confusion in terms of the application of traditional property rights laws within the digital sphere. He therefore is advocating for a more simplified model of property ownership that protects the integrity of products and services used by consumers.
In an interview with BTCManager, Fairfield offers some fascinating insights on the changing crypto landscape and how it collides with prevailing property laws that are out of alignment with today’s rapidly growing digital landscape.
In your view what impact will advancements in blockchain and cryptocurrencies have on the future of digital property?
Blockchain technology will permit us to own fully intangible digital assets. The problem with digital assets traditionally has been that they can be illegally copied. A solution might be a centralized license server, on the iTunes model. That, in turn, gives too much power to the server manager to put extra conditions on using what we own. For example, a license server owner like Apple might try to prohibit owners from selling their purchased MP3s. But a legal copy can be pegged to a public ledger, giving sellers confidence that the asset is not being duplicated, and buyers the ability to sell their digital assets when they are done with them.
How do digital issues like double-spending, copying and counterfeiting come into play here?
Copying and double-spending are part of every property treatment of intangibles. Money is worthless if anyone can print it, and check fraud (basic double spending) uses a time lag in the check settlement process to print money by using cash the check-writer does not have. Distributed ledgers are important because they not only solve this for cash equivalents, they solve it for a range of assets that can be copied. Music, movies, eBooks, home titles, stocks, bonds, security interests in personal property, and much more could, if we play our cards right, become fully verifiable and transferable through these ledgers.
Can you share your thoughts on the future of crypto-ledgers and their impact on the world of property and privacy?
Crypto-ledgers offer verifiability without full disclosure. This is hugely important for property and privacy. We could have a public, government-maintained database of who owns what. Australia essentially does this in its digital land title system. But the problem with such systems is that people don’t like disclosing what they own to everyone. That is, in it’s own way, as invasive as a Samsung TV that spies on your bedroom.
What crypto-ledgers do is permit anyone to verify that they are the legitimate owner of an asset to anyone who wishes to buy it and to contract pseudonymously with those who wish to use it but not buy it (think here of the owner of a blockchain-linked autonomous car who is happy to let passersby use it for a fee), and so on.
Can you talk about the ability of crypto-ledgers to permit remote transactions without identity.
Yes. This is crucial. The Equifax model must die. There is no reason that my name, social security number, and address should be the keys to my credit. We see movement away from this in systems like Apple Pay, which gives the merchant a one-time token, not the consumer’s entire identity, as a way to ensure the merchant gets paid. The problem with that system is that Apple is again a central and controlling player in this model. Apple can spy on, store, datemine, and monetize the purchasing behavior of its consumers just as the credit card companies could before.
So how can this pervasive issue be solved?
The solution is to create an ecosystem where there is no need for Apple. That was the original promise of the bitcoin blockchain: verifiable transfer of value without need for the snooping that goes along with the name, address, and credit card number online economy we have going now.
What other considerations in the digital space should we be paying close attention to?
The community should be mindful that it is still a community, and that it still has influence over the blockchain. Sometimes evangelists present the technology as if humans cannot really do anything about how it functions. Nothing is further from the truth. If core players decide to change the code, and enough miners assent, the basic nature of the ledger will change. So it is important to pay attention to who holds how much power over which parts of the system when it comes to blockchain, just as much as it is important to monitor who holds how much power in other financial structures.
What trends do you see on the horizon over the next 12-18 months as the Crypto/Blockchain space continues to advance?
I believe we will see more permissioned blockchains that serve as clearinghouses for specific settlement problems. I believe that we will see increased startup activity around cryptoledger functionality aimed at verification of truth, and not merely transfer of value. And, I think that the currently hot ICO space is headed for an uncomfortable and head-on collision with securities regulators.