A Potential New Paradigm of Property on the Horizon
The world is changing rapidly these past few years, for better and for worse. There are as many perspectives on these changes as there are people old enough to understand the accelerating pace. However, in the end, economic impacts dominate the changing landscape.
Importantly, change is coming to the way we think of property. No, I'm not talking about the World Economic Forum's disturbingly blunt, "you'll own nothing and be happy" vision of the Great Reset. I'm talking about the way cryptocurrency has already begun to affect changes in conceptual thinking.
Before I go any further, there is the burden to make clear and attempt to intuit an axiom on which these arguments depend, which is that the world economy will function primarily using cryptocurrency. The exponential growth of valuable information that is increasingly digitized already looks to overwhelm tangible stores of value. There seems to be no near term cap to the growth in value of digital information. Certainly our proposed axiom fails if the people of the world revert to some kind of feral state, as happened when the Mayans failed to solve their resource bottleneck. A flying space rock could simply end human civilization in the blink of an eye, cosmically speaking. For the purpose of this article, we tether our axiom to the supposition of technological progress. Simply, in the absence of serious technological reversion, cryptocurrency (most likely buoyed by Bitcoin) will become the world's dominant form of money. And intuitively speaking, it is hard to imagine some form of "internet of money" not taking root. It seems equally hard to imagine users not preferring nearly all of the features designed into the current dominant forms of cryptocurrency since those features are specifically oriented toward providing each sovereign user with security and agency over their finances and assets.
The kind of paradigm shift that may already be taking place with the rise of cryptocurrency will surprise many people who have been accustomed to a system that has been around in one form or another for many centuries. The paradigm of property rights will seem intuitively normal to children growing up playing videos games with digital assets. However, those of us accustomed to the economy of yesteryear will take some time overcoming cognitive dissonance and getting used to it.
Most people have some sense that workers have a right to the fruits of their labor, though only some labor can be captured in tangible form(s). Such norms become community standards and have been codified into law as property rights. Property rights might fairly be described as a system that exists in equilibrium in which the economic incentives result in benefits that exceed the costs. The enforcement costs are often aggregated through the government, but there is nothing inherent about the goal of ensuring the right of individuals to negotiate the fruits of their labors that necessitates government involvement. It might be fairly said that property rights systems can be more or less decentralized, and in societies of increasing wealth inequality (perhaps including failing empires) the laws that govern these rights become increasingly gamed by those with enough power and wealth to bribe and bully in a political arena to which few citizens have real access.
In the digital age, information has achieved astronomical value that has increased in aggregate at an exponential rate. A handful of governments and corporations have all but monopolized much of the capturable value, turning the information extracted from consumers into monetized products or power. Large technology companies such as Google, Facebook, Microsoft, and others act as information vacuums at nearly zero cost aside from equipment, employees, and increasingly large lobbying budgets. This high level of de facto centralization of the value of information already appears problematic to many of us. It is the power to permission the markets, and thus to steer the expressed interests of participants. In this sense, we have moved closer and closer to what some critics have reasonably described as market socialism.
Cryptocurrency flips the recent evolution of the information economy and sets the stage for a new system in which digital information can be controlled by private key holders who can then seek rents for their own information in the form of payments (often micropayments) per view, share, or even edit. This gives rise to a modern conception of the Self-Sovereign Individual. Rather than depending on a government, backed by police and military power, to enforce property rights, access to property is simply implicit in the holding of unique private keys. Certainly, this change requires for wealth holders to take on a new form of responsibility over their keys and data. Let us now examine the potential benefits of doing so.
Trust minimization. The payments made into the system in transactions (even if micropayments) do add up to tremendous payments for those providing system security. This is what allows for what many Bitcoin advocates call trust minimization, which allows for greatest ease of asset transfer without the need for risks associated with "trusted third parties".
Increases in Information Availability. Information markets produce financial incentives for people to make productive use of their own data, without need to fear its misuse. Or, rather, people will price their information contractually understanding their own value in keeping that data private. One topical example might be health or medical data, held in decentralized and encrypted form. People might choose to record more health data in secure form, then choose to give or sell it to researchers whom they deem trustworthy.
Decentralization of Information Economies. Current tech giants that are accustomed to paying virtually nothing for information will gradually find themselves sharing the profits from that information in the form of the discussed payments, or finding themselves unable to collect information for which users would charge more for access. We can only speculate at this point what forms of equilibria markets will bring to the process. I expect to see small specialized companies form with expertise in making specific forms of data valuable in various ways.
Reputation systems will rebalance. Those of us who profit from sharing information (whether in the form of basic data, articles like this one, or other forms) will find out information valuable to the degrees to which our reputations remain strong. This encourages a virtuous cycle of basic cooperation while discouraging the spread of disinformation. And instead of these reputation systems being centrally run like a government social credit score, there will emerge many diverse forms of reputation that do not require homage to some central ideology that runs the risk of singular existential mistakes.
Taming "the demon". The existential threat posed by runaway artificial intelligence must now cross a vastly more complex (and potentially impossible) economic barrier in order to achieve the runaway annihilation hypothesized in the story of the Paperclip Maximizer. Perhaps this slows the development of artificial intelligence to exactly the pace at which humanity can manage the reins so as not to allow for destructive inhuman domination. Simply the process of bidding up the values of the resources needed to produce a runaway paperclip manufacturing machine runs into payment for the externalities of excess paperclips in a market feedback loop.
I have little doubt that I am leaving advantages off this brief list. Perhaps some of them will only become apparent after the new paradigm takes firm hold of the world's economy. If you have quibbles with my list, or suggest further items to the list of benefits, please comment. In general, I would like these articles to encourage and produce discussion we can further build on.
For further reading on the topic of property rights in the era of Bitcoin/cryptocurrency, check out Konrad S. Graf's free online book Are Bitcoins Ownable?