Digital identities and personal data: A Tragedy of the Commons
The well-documented plight of our digital identities and associated personal data — mapping to faulty internet infrastructure— can best be understood through the framework of The Tragedy of the Commons (TTOC). The theory states that individuals, acting rationally and in their own self-interest, will consume an available “common resource” (ie; not privately owned) to the point that collective consumption by all of the individuals stands to deplete or even destroy the resource, to the detriment of all ecosystem participants. More broadly, the theory observes that people, acting individually for their own benefit, can oftentimes have a detrimental collective effect. Gains are individualized, and losses distributed — A good recipe for incentivizing morally hazardous behavior.
The most widely cited example is the original case, chronicled by William Forster Lloyd in 1883 (to say nothing of epochal prescriptions for TTOC). In his Lecture, he explored the depletion of unregulated “common” (not privately owned) pasture land by cow farmers in the British isles, who sought to feed their livestock.
All farmers were acting rationally as individuals by bringing their cow to feed at the pasture. However, each farmer’s actions collectively depleted the pasture to the point of completely expending the resource.
Putting personal data in the TTOC framework, we arrive at the following:
- As individuals, we sign up for services provided by Facebook, gmail, banks and other centralized providers. Individually, we benefit from these services. Collectively, our actions promote the creation of a mass data resource that is maintained and profited from by centralized service providers and parasitic third-party data brokers. Minimal economic benefit accrues, beyond the paltry individual benefit, to the creators of the mass resource. Our collective data resource is treated like a public common, free for consumption with no protective barriers. In addition to squandering the value of our data (or worse, its pillaging), negative consequences like creating honeypots for hackers/regulators, ceding control of our digital identities to service providers, password management nightmares and other malignant side effects have arisen.
Private property solves TTOC
As widely accepted, TTOC and similar situations are solved by privatization of the resource and robust private property rights enforcement. In the original TTOC cow pasture case, Privatizing ownership of the commons would mean the new owner(s) has greater incentive to maintain the long-term health and sustenance of the pasture (assuming grazing was the owner’s most efficient use of the resource). Presumably the owner of the new private pasture would charge a price for access, which allows for cow farmers to make a rational decision of how to allocate their own capital and resources (cows).
If the private pasture owner successfully operated the pasture, you could expect more land-owners to compete and make grass available for pasture. More pasture supply would lower the price for cow farmers and provide for long-term sustenance of the key resource: land/grass. All parties gain.
Similarly, we need to apply a private property-like framework to personal data. Without it, our data will constantly be subject to the pernicious side effects and outcomes mentioned above. However, this is extremely difficult, if not impossible, to do from a legal perspective. Historically, the property rights legal framework was conceived to address physical articles, goods, or property. For example, right now, I’m the only person in the world who’s sitting in this specific chair. Other people might have similar ones, but this particular chair is mine. Legally we can account for the idiosyncrasy of a physical asset to its owner via property borders, title, purchase provenance, and a host of other means.
This framework does not jive with data. Identical Data can exist in the same state, in two different places at the same time, so applying a physical-goods property-rights-framework for data with boson characteristics will not hold.
Enter blockchain
Blockchain technology is an amazing feat of innovation that provides a way for us to to account for the ownership and transaction of digital assets. With the combination of cryptography and an elegant consensus mechanism, we are able to align economic incentives such that participants that don’t know or trust each other, tasked with keeping a universal ledger of transactions, can agree on the constantly updating state of this ledger. Amazing. We can do all of this without ceding the accounting (and trust) to a centralized entity like a government, company or other service provider.
What does this mean for our data?
With the constraints of legal ownership of data, the best route is to claim tech-enabled “ownership” of data. As consumers, we have the most accurate copy of our data. In most places we create it (various platforms and devices), we can pull a copy of it, via platform API or hardware logs, and have this copy in our possession (note that the data amalgam becomes more valuable with each disparate data-set added to the gestalt).
Now, we can make a write to the blockchain that references the relationship of our newly reclaimed data to our specific and unique identity. The data itself does not need to live on-chain. The data can live in local or other consumer-desired storage, but the data-to-identity association can be referenced by a hash on the blockchain. This establishes an origin point for future checks of provenance, integrity, tampering, appends, attestations and any other records of change that would require a unique cryptographic key. The consumer can do this, using blockchain-based tools and apps, without having to trust companies, platforms or anyone else.
How do we gain from this?
Not only do we divorce ourselves from ~40 years of faulty internet infrastructure (and all accompanying problems mentioned above), but new opportunities will abound. With a new regime of tech-enabled private property, and thus scarcity, around our data, we stand to gain economically from this newly protected resource. We can set a price barrier for our data pasture, both individually, and collectively, which will provide for:
- Aggregate and individual personal data marketplaces
- User-controlled Identity verification
- Ease and interoperability of identity-related services
- Broader access to capital, insurance and other services
- Alleviation of inefficient legacy systems
- Mitigation of costs and risks associated with centralized data administration
This leads to benefits at both ends, with economic and efficiency gains on the one end, and mitigation of time, monetary costs and risks on the other. None of this is speculative. It’s all being built. At Datacoup, we are happy to be on the front lines, pushing the envelope for consumer-owned data and all of the benefits that will come from this paradigm shift.
Next up, we’ll explain how we intend to use the blockchain for our app, and for a token-enabled ecosystem.
