Is It Possible to Use the Blockchain to Reproduce Rarity in the Digital Environment?
One of the many functions available through the blockchain—in addition to creating peer-to-peer virtual currencies (cryptocurrencies) or protecting information (information security)—is now the possibility of creating unique “digital objects”. In short, the objective is to reproduce in the digital environment a property that is traditionally attributable to physical objects, i.e., “rarity”.
You have undoubtedly heard about the blockchain, a technology that has many disruptive effects. If not, we invite you to first read this article that presents a summary of the concept.
Reproducing the “rarity of the physical object” would be one of the theoretical possibilities now available through the blockchain. It is something we lost when the web was invented and content digitization began.
In the past, recorded music for example had value because its rarity could be managed. To be able to listen to a Ray Charles album, you had to physically make your way to the record store to purchase the album. And the store did not hold an infinite quantity of the album in stock. It had to order copies from a distributor which, in turn, had to keep inventory with the record label that controlled the production of the album. And if a thief broke into your home and stole your precious opus, it was gone forever. You, the victim, was henceforth “depossessed” of your album.
Today, now that music is digitized, that Ray Charles album in MP3 format stored in your Walkman or mobile phone can easily—without friction or restriction—be copied onto a USB key or sent to a friend by email. The music industry took a beating and saw close to 40% of its revenue melt away like snow in the sun between 1998 (the year Napster was invented) and 2014 (the year when streaming revenue provided reinforcement).
It seems that yesterday’s “rivalrous good” which could be controlled because it existed in the physical world (e.g., the vinyl record) has become a “non-rivalrous good” since its dematerialization.
But the blockchain promises to reverse all that…
In addition to the possibility that it offers to “store value” or keep an unfalsifiable record regarding an agreement or a transaction, the blockchain would also make it possible to guarantee that a value or identity “X” could not be found at two different locations at the same time in a connected digital environment (the web, for example).
We were recently given the opportunity to observe the “cryptocollector” with the Cryptokitties, a market in which people buy small digital kittens that are unique and later exchange them among each other. If there exists such a buzz for unique images of kittens, take two seconds to imagine how popular a complete collection of NHL hockey cards launched would be on the blockchain… It’s quite easy to understand how the actual physical card of Mario Lemieux – “UPPER DECK RETRO PLATINUM #83” (1999-2000) – is worth close to $10,000 twenty years after its entry on the market. Apparently, it’s the only copy left in the entire world! “Rarity creates value,” as we are explained in our grade 11 economics course.
Despite all that, the idea of reproducing the rarity of a material object in a digital environment remains theoretical at best and its effectiveness remains to be demonstrated. Until evidence to the contrary, digital counterfeiting is quite easy and very inexpensive to do. Whoever is familiar with the “Apple+Shift+4” command (screen snapshot) on a Mac can create “the image of an image” in a single click. That being said, it would appear that crawlers, i.e., simple programs that constantly scan the web, would have the capacity to locate counterfeit digital objects on the web. Several companies have already announced that they use the blockchain to control the rarity of their digital content as well as to ensure that it is used legally. Here is a partial list of these companies:
- Ascribe: The organization’s primary mission is to enable the creation of limited editions of digital works that are accompanied by a certificate of authenticity that specifies said works’ origin and ownership.
- Kodacoin and Binded: Both companies offer the possibility of creating a unique digital fingerprint that is linked to an image and that can then be distributed and associated with user licences. These fingerprints are published on the blockchain and a crawler scans the web in search of counterfeit copies.
- Monegraph: This studio based in New York sells user licences for works at variable prices and conditions. Payments are executed through intelligent contracts.
- Verisart: This company provides the possibility of managing certificates of authenticity for individual works making up digital artwork collections.
- Scenarex: This company proposes literary content to creators and, to book publishers, the possibility of optimizing how they manage their digital works and detect hacking activities.
In sum, such solutions offer creators the possibility of identifying their works, ensuring their traceability and monitoring how they are used. A solution such as Dot Blockchain Media proposes the implementation of a new form of codec and file (.bc instead of .mp3 or .mov). Its authenticity would be guaranteed by a blockchain. In the absence of an Internet connection and without the prior authorization of the blockchain, a .bc file could not be executed. No legal copy, no playback. A 2.0 version of the Digital Right Management (DRM) solution. It is important to point out that, between 2007 and 2009, EMI, SONY and ITUNES successively abandoned the false good idea of the DRM solution.
Blockchain technology now makes it possible to create a unique “digital object” and to control its use thereafter. In the coming years, it will be very interesting to monitor how such a principle will develop in the world of media content.