[87] We Don’t Truly Own Anything Digitally
[Digital Property Rights, Ownership on Internet, Revisiting the Metaverse]
GM Readers!
Sharing an essay for our Evolving Internet Insights Newsletter unpacking Yat Siu’s (CEO of Animoca) recent TED Talk on the importance of digital property rights.
-LJW
(P.S. For the summary and further breakdown of this essay, follow me on Twitter)
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Note: Some sections of this essay were originally released on my Evolving Internet Insights newsletter.
_Revisiting the Metaverse 🌐
Yat Siu, Co-founder and CEO of Animoca Brands (one of the largest Web3 gaming companies today) believes that the future of all digital activity will converge in the Metaverse. It will offer new opportunities for value creation and innovation across many different industries, including gaming, social networking, education, and commerce. The Metaverse represents an evolving frontier where societies will increasingly spend more time both for entertainment, leisure, and economic activity.
But what is the Metaverse?
When people talk about the Metaverse, they often debate the semantics of what the word actually means. Some people think it’s about gaming, others think it about virtual reality.
Matthew Ball, a thought leader and investor in the Metaverse industry, described the Metaverse as “a massively scaled and interoperable network of real-time rendered 3D virtual worlds and environments which can be experienced synchronously and persistently by an effectively unlimited number of users with an individual sense of presence, and with continuity of data, such as identity, history, entitlements, objects, communications, and payments.”
Given this sticking point on wording, the discussions around the Metaverse and all of its components usually go nowhere because people have different definitions of the Metaverse.
This is the classic “missing the forest for the trees” phenomenon.
Broadly speaking, we think of the Metaverse as the “3D Internet,” but the “3D” part is less important than the “Internet” part because the Internet is where we increasingly spend our time across all aspects of our lives.
When you see the word “metaverse,” replacing it with the “Internet” is a good reframing because at heart the metaverse is really about the Internet and its next evolution. Said another way, the Internet is an early version of the Metaverse and how the Internet works today is critical to understand.
_The Importance of Digital Property Rights📜
At heart digital property rights is about ownership.
In his TED Talk, Siu said “whenever we are online, we accrue value to networks that do not belong to us.” This concept of ownership is key to understanding the fundamental difference between Web2 and Web3.
In the Age of AI, this means we generate data that we do not own for platforms that do end up owning that data. Siu reasons that anything we do online can be reduced to data of some sort – the Tweet you post, the image you share, the content you create – all of it is data of some sort.
Siu believes that for the Metaverse to be accessible to all and not look like the closed off “walled gardens” of Web2, the Metaverse must be open, transparent, and have strong digital property rights.
The logic goes something like this: ownership of digital assets (data, etc) enables control over those assets, which means economic freedom because users can choose who and how others can use their data, which unlocks economic opportunities and allows more individuals to participate in the economic value that they create.
A good analogy to describe this concept further is the difference between renting your home versus owning your home.
When you own your home, you tend to make improvements which adds value to the property and you get to capture that value if you sell the home.
In contrast, when you rent a home, none of the value creation accrues to you.
Siu sees a similar relationship when we participate on digital platforms. A content platform gets more valuable when its users create more content, but the users do not capture any of that value because they don’t really own the content.
In the chart below, we can use intellectual property (IP) protection as a proxy for digital property rights because they both reinforce the idea of ownership. Countries with strong property rights fare better from a GDP per capita perspective than countries with weaker property rights.
The current model of ownership in the digital world however doesn’t have strong property rights. All the data users create is governed and controlled by a handful of technology companies (remember, anything on the Internet that is digital can be reduced to data of some sort–data that is owned by the platforms we use to create on). Using market capitalization as a proxy for GDP, the world’s top ten GDPs globally would also theoretically include two technology companies, Apple and Microsoft–meaning these companies are bigger than the vast majority of economies in the world.
Looking at it from another angle, the S&P 500’s gains since January 2023 were driven by five technology companies. They are: Apple, Microsoft, Alphabet, Amazon, and Nvidia.
_So What?🧐
The Internet is a place we are spending more and more of our time (and money) on. And it’s not just for entertainment, but also for work and everything in between. If we look at the daily time spent using the Internet, it’s already a large part of our time awake and most of the work day.
If the internet and our digital lives are such a critical part of our actual lives, then Siu’s argument for ensuring the Internet and, in the future, the Metaverse, have digital property rights that isn’t governed (or less governed) by platforms is an important topic to think about.
🌐📜🙏
Additional Readings:
Yat Siu’s TED Talk on the importance of Digital Property Rights. It is only 10 minutes long and worth the watch!
Ownership and Capitalism: Essay explaining the relationship between ownership and capitalism, and how Web3 technologies might reinforce this relationship.
The Critical Role of Ownership: Essay explaining why digital property rights are critical.
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🛟 Disclaimer:
This post is provided for educational and informational purposes only. Nothing written in this post should be taken as financial advice or advice of any kind. The author(s) may own some of the NFTs, art and/or collectibles mentioned in this post. The content of this post are the opinions of the authors and not representative of other parties.
Empower yourself, DYOR (do your own research).
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