73 Pages Posted: 5 Oct 2014
Date Written: October 3, 2014
Property is the law of lists and ledgers. County land records, stock certificate entries, mortgage registries, UCC filings on personal property, United States Copyright and Patent registries of interests in intellectual property, bank accounts, domain name systems, and consumers’ Kindle eBook collections in the cloud — all are merely entries in a list, determining who owns what.
Each such list has suffered under a traditional limitation. To prevent falsification or duplication, a single entity must maintain the list, and users must trust (and pay) that entity. As a result, transactions must proceed at significant expense and delay. Yet zero or near-zero expense is the fuel of internet scalability. Until technologies get cheap and fast enough, they cannot benefit from the full power of the internet. Property transactions have not yet truly seen an internet revolution because they are constrained by the cost of creating centralized trusted authorities.
This article retheorizes the contours of digital property if that central constraint were removed. There is every reason to believe it can be. A spate of interest in cryptocurrencies has driven the development of a series of technologies for creating public, cryptographically secure ledgers of property interests that do not rely on trust in a specific entity to curate the list. Previously, the digital objects that users could buy and sell online were not rivalrous in the same way as offline physical objects, unless some centralized entity such as a social network, digital currency issuer, or game company served the function of trusted list curator. Trustless public ledgers change this dynamic. Counterparties can hand one another digital, rivalrous objects in the same way that they used to hand each other gold bars or dollar bills. No intermediary or curator is needed.
Trustless public ledgers can help to reshape property law online. They offer the kind of near-zero transaction costs that have provoked radical disruptive innovation across the internet. With near-zero transaction costs, online property transactions can finally benefit from the huge scaling effects of internet technologies.
In addition, the advent of this disruptive technology provides an opportunity to more deeply theorize property interests in information environments. Property online is anemic. Consumers control few online resources and own even less. This is in no small part due to antiquated notions of property as the law of physical, tangible resources. With the advent of new technology that can create digital, scarce, and rival intangible assets, these basic assumptions should be reexamined, discarded, and replaced with a theory of property as an information communication and storage system. That is the project of this piece.
Keywords: Cyberlaw, eCommerce, Bitcoin, Property, Crypto currency, Currency, Digital Currency, Payments, Money, Intellectual Property
JEL Classification: K10, K11, K30
Suggested Citation: Suggested Citation