Behind any digital token, asset, or contract is a package of rights -- how we assign and interpret these rights is at the heart of blockchain governance. I explore this in my recent article, "Blockchain Ownership and the Tragedy of the Crypto Anticommons"
medium.com/@AlpenSheth/bl…
medium.com/@AlpenSheth/bl…
Cryptocurrency and blockchain are creating new property rights and restructuring old ones. As assets "migrate to blockchain(s)," we reach a critical fork - -to decide how and which kinds of property rights will be allocated in our society and economy.
Unlike in Ronald Coase’s famously upbeat story in his paper, “The Problem of Social Cost,” property markets do not bring automatic efficiency and instead can actually lead to an array of unusable property fragments = anticommons, a free market paradox. I see at least 5 tradeoffs:
1/ Social-logical patterns versus complete abstraction. Complete abstraction of property rights will lead to un-usability of rights i.e. anticommons property. We need to identify functional patterns for “property primitives” based on compositionality instead of modularity
2/ Static versus evolutionary legal system. Human interpretation cuts both ways in property law. It can lead to bugs & friction but its also one of the key mechanisms for evolution over time. Governance of some kind has to mitigate against over-rigidity of “censorproof” protocols
3/ Possession vs distribution, investment efficiency vs allocative efficiency. In practice, “Property is only another name for monopoly” (@glenweyl Eric Posner) where investment efficiency trumps allocative efficiency. For cryptoeconomic responses see @simondlr @VitalikButerin
4/ Threats to old open source versus new kinds of crypto “collective goods" (@jbrukh). For the crypto stack, being open source has been key to rapid innovation @naval @jessewldn How do protocol designers draw the line on the commodification of ideas, things, people, and services?
5/ Another tradeoff from layering blockchain complexity onto everyone’s property is potentially empowering new (expensive) crypto-legal intermediaries for interpretation and dispute services. Is financial decentralization dependent on legal centralization?
For the first time, the @mattereum team appears to be breaking new ground through mechanisms such as the “smart property registrar” and “automated custodian” as legal extensions of blockchain into everyday reality.
I don’t think @mattereum’s innovation and others like it can be overstated. At first, we’ll witness on-chain transactions shape off-chain ownership. But eventually, the distinction between the two worlds will vanish.
Ultimately I agree with @wheatpond and @leashless about the general “direction of travel” towards digitization. For now, making property rights programmable is a technical problem. But we can't underplay the potential for blockchain to backfire in some cases. @stephendpalley
Property on blockchain will be inevitably influenced by the political and economic strength of the interests involved “property rights are less a legal ‘system’ than a historical record of winners, losers and social accommodation in economic and political struggles--David Kennedy
The more we abstract rights and treat property as a thing, a commodity, rather than a relationship, we risk creating fragmented crypto anticommons. We should keep that in mind as we open up many new kinds of property relations through cryptocurrency and blockchain technology.
Here's a link to the references and some more thoughts and materials: medium.com/@AlpenSheth/bl…
