Permissionless or worthless

Consumers who don’t care about the benefits of blockchain (most), might be surprised to learn how badly they would want a permissionless system for digital ownership.

We’ve all heard the classic examples for why NFTs and cryptocurrency will consume culture; from Fortnite skins to A/R fashion to Bitcoin remittances. The value of breaking down the benefits of blockchain technology to these real life examples that can get someone nodding their head and going ‘huh, yeah, that’s interesting…’ is invaluable. These are also great potential uses that solve real human problems. But, what will it all mean if we forget about the principles the technology was founded upon in the first place?

The blockchain was created to be decentralized, permissionless, and trustless. As a result, ownership of the digital assets existing on top of it should inherently carry the same features. However, in most cases, centralized platforms and governments that facilitate access to blockchain tools don’t want to honour those principles. This threatens what it means to actually own your digital identity (an aggregation of the assets and experiences you accumulate digitally). To understand why these principles are important to digital ownership, let’s take a look at how they define ownership in the real world.

Let’s say, for the sake of this example, that I own a Bugatti. And let’s also say it costs more than any of Andrew Tate’s Bugattis… just for shits. My ownership of my super car is what you could call, decentralized. This is because a network of signals validate my ownership, rather than one specific person or entity. I have the keys, it’s parked in my garage, I have a receipt of purchase, and so on. Because of this, my ownership is also permissionless. Meaning nobody has to give me permission to use it. I own it, so I can drive it whenever and mostly wherever I like. Finally, my ownership is also trustless. I don’t have to trust anyone to verify that it’s a Bugatti. I can see it’s signature shape and I can test its 480km/h top speed all on my own. In conclusion, my Bugatti, like everything I own in the real world, is decentralized, permissionless, and trustless.

Now, you might be questioning the purpose for applying these big words towards a complicated definition of what it means to own things. But, it’s an important definition. To explain why they matter, especially in this discussion, let me apply the same words to the things we currently ‘own’ in the digital world.

First, we’ll start with your Facebook profile. Something one could argue that you own. But hang on, who can verify that you own it? The only entity with a verifiable record of that ownership is Facebook. They have the authority to declare it yours, but also the individual power to take it away, because it’s not decentralized.

What about the money in your RBC checking account. Do you own that? Well, Considering you need the banks permission to move it, I’m not sure we can say that you do. Furthermore, you also need the bank to act as a middleman when you send money to your friend. They must verify your account balance because it’s not stored in a way that’s verifiable by the public. Therefore, your money is not permissionless, or trustless.

I hope you’re seeing why these specific words are important when defining what it means to own something.

In real life, ownership is simple. We have our eyes and ears and house deeds to tell us and everyone else what’s ours. But, in the digital world things get tricky. And as augmented reality, cloud, IoT, and other technology increasingly entangle our digital experience with our physical existence, who we are online becomes increasingly *who we are (*not in an existential way, but in practical terms). The things we own, the experiences we collect, the accomplishments we have. A whole record of ‘you’ that’s currently controlled and siloed by a few large corporations. You know the ones.

The blockchain seeks to change all of that, by giving us autonomous ownership over our digital identities in a way that’s transferable across websites, platforms, and protocols. But, if this new internet is not built in a decentralized, permissionless, and trustless way, we’ll end up no better off than where we started.

And that’s exactly where we’re headed.

Starbucks is the first major brand to launch a meaningful application of NFTs and blockchain technology. They’ve integrated it into their loyalty program to provide customers with badges that they ‘own’. But do they own them? Would I be able to redeem my badges for rewards at Starbuck’s competitors? Like McDonalds or Tim Hortons? Or even local coffee shops? Would my digital coffee drinker identity be transferrable anywhere I go? Hopefully, but I doubt it.

And what about exchanges like FTX that can turn off withdrawals on the crypto that you supposedly own. Sounds a lot like another major type of institution. Cough cough, it rhymes with Wank.

We even have the leaders of the space, who’ve launched popular NFT collections as startup brands, censoring access to the digital assets their community supposedly owns. Utility, for many of these projects, is based on whether that community opts-in to non-legally structured royalty payments. I have nothing against royalties and I wish they were enforceable on-chain but without an upfront legal agreement, this is not a strategy based in decentralization.

Blockchain technology solves a lot of problems, whether it’s permissionless or not. But, it misses some of the most important issues and even creates many new problems when its applications ignore those founding values. People need a way to own something digitally the same way they can own something physically. Especially, as our digital and physical experiences become completely immersed with one another.

I’m not certain the future of blockchain is being built with this principle in mind. I believe the reason for that stems from our desire to solve business problems, not human problems. Centralized businesses are not incentivized to take the human approach. They have shareholders and their bottom line to think about. The onus seems to be on the builders and the community to create and demand something that puts the human experience at the very center of a value proposition. And to be unwavering in their commitment to the decentralized, permissionless, and trustless values blockchain technology was founded on. I’m probably missing something, but that feels like the only way forward which guarantees we won’t look back and regret it all.

The question now is, how do we do it? Again, I’m not sure. But, I believe we start by putting the power in the hands of individuals, not institutions.