JAY-Z, let me introduce you to The Blockchain.
“Financial freedom my only hope / Forget livin’ rich and dyin’ broke”
Over the weekend — JAY-Z released his 13th solo studio album, 4:44. Naturally as a life-long fan of his work — it’s the only thing I’ve been playing since. This album is the most mature piece of work JAY-Z has put together to date.
It always perplexed me when the critics said “he’s too old for rap now, please stop making music Jay and retire forever.” Since when is age a limiting factor in music? If anything, a rapper should improve with age — adding a wider array of lexicon, subject matter and wisdom into their lyrics and work.
With this maturity, they should be able to tackle more complex subject matter in their music and that is exactly what Jay delivers in 4:44. One of the key themes in 4:44 is Jay’s aspiration to acquire true financial freedom. He continuously relays this message, challenging the listeners aspire for the same.
“Y’all think it’s bougie, I’m like, it’s fine / But I’m tryin’ to give you a million dollars worth of game for $9.99”
In fact, the entire album is scattered with Jay dropping knowledge about the power of entrepreneurship and capitalism, his path to harnessing this power and passing this knowledge on to his family and friends.
Well Jay — I have some news for you. The blockchain is the most powerful tool in the world for acquiring true financial freedom.
So what is this blockchain and how can it possibly help the almost billionaire Jay-Z?
The “God” Protocol:
In 1997, Nick Szabo published a short paper titled “The God Protocol”. Nick envisioned the creation of a be-all and end-all technology protocol, one in which a mutually trusted third party (“God”) handled all transactions. All parties would send their inputs to this trusted third party and rely on it to determine the appropriate results and return the outputs to the same parties.
This concept drove home a very important concept — the core factor in business is trust. Trust that we currently have no choice but to leave in the hands of powerful middle-parties (governments and large financial institutions) who have a history of abusing this power and are ‘too large to fall’. As a result of this, they are rarely held accountable for the abuse of this power. The crux of this was seen during the 2008 financial crisis — the ‘deity-like’ third parties were exposed for their abuse of this trust. However, their followers who trusted them were the ones who ultimately paid the price.
The fallout of the financial crisis led to the inception of Bitcoin by Satoshi Nakamoto. A digital currency in which encryption techniques regulate and verify the transfer of funds. However, it was the protocol behind Bitcoin that is truly evolutionary in our current world. It established a set of rules which allowed data to be transferred while maintaining integrity through encryption and public verification — all without the use of any third parties. This protocol is self-governed. It is in best interest of all users to ensure it remains intact as one of their primary means of economic transaction. This is what has allowed Bitcoin to reach what is now a $40B+ market cap with $1B+ moving within the protocol daily. Bitcoin is now one of the most valuable and liquid assets in the world — all without any interference from a central bank.
Okay — so Bitcoin is huge, but what exactly does this mean for me?
The blockchain has three key concepts:
- Distributed records — blockchain is established on a peer-to-peer network with a distributed ledger of records. What this means is instead of the records being centrally controlled — everyone becomes an owner of their transactions.
- Public — all transactional inputs and outputs are publicly presented on the blockchain which allows multiple users to verify their existence as public record. This is further strengthened through a consistent audit of the transactions to verify them as public truth.
- Immutable — once posted and verified, transactions are immutable on the blockchain. Records and history cannot be overwritten or reversed. Encrypted and recorded as a chain of transactions, one would have to change every record in the chain to cheat the records. This makes changing the transactions practically impossible.
The above three principles mean Shawn can send Ty-Ty $100 on the blockchain and the public would verify the transaction so that no one can ever reverse its occurrence. Further, Jay can’t double-spend that $100 he just sent as it would be rejected on the ledger by the public.
This can all happen without any financial intermediary. Individuals can now deal with each other directly — with confidence, trust and without having to pay anyone in the middle to do so. And guess what Jay — you can do this with any asset of value.
This allows us to naturally evolve from the internet of information to the internet of value — backed by the blockchain and it’s ability to provide immutable “proof of ownership”.
Here are a few real-life examples JAY-Z walked us through in 4:44, and how the blockchain would have drastically changed things:
“Masters of your Masters”
A key ingredient in financial freedom is protected ownership of your assets. Jay makes this clear throughout the album as he advocates ownership of your art or your Masters in the world of music (original soundtrack, lyrics and artwork). In the traditional industry model — the artists would retain limited control of their work. Record labels and other third parties retained ownership taking large pieces of the pie leaving the artist with a fractional return. In fact, the artist is the last one to be paid in this situation.
“Forget a slice of the apple pie, want my own cake / Chargin’ my own fate… So our music is ours”
The problem is — the traditional model is ‘pre-internet’. It is dated in the vinyl age where large production and distribution costs stood between artists and their listeners. This is no longer the case — the internet of information allows artists around the world to share their work through the click of a button. However — when it comes to monetizing their work and being rewarded, artists face challenges of piracy and unauthorized use of their work. This leaves them no choice but to work with centralized parties such as record labels, streaming services and internet conglomerates such as YouTube to make money. The problem here is two-fold, artists lose control over their work and are forced to take a significantly minor piece of a pie that they baked. A clear example of this is Spotify providing fractional returns to the artists. Further, the artists must blind-fully trust that these parties are truthfully reporting their returns.
Jay visualizes this in the heart of the track titled “caught their eyes”, narrating his side of the story surrounding Prince’s estate.
“This guy had ‘Slave’ on his face / You think he wanted the masters with his masters?”
Prince had a history of confrontation with the music industry. This was epitomized through a very public dispute in which he fought back for control and ownership of his music from his label. He famously wrote the word ‘slave’ on his face stating: “If you don’t own your masters, your master owns you.”
Jay recalls this struggle to remind his fellow artists the importance of ownership and control over your work. In fact, TIDAL — his music streaming service was built on this principle of “artist owners”. JAY-Z was fighting for the right principles, but at the time he didn’t have the right tool to deploy his vision. The press, public and his peers largely dismissed TIDAL because of this.
TIDAL needed the blockchain. Artists can now leverage the internet of value — where they can publicly stake ownership over their music. This allows them to control their work — its distribution and monetization across the web.
“Proof of ownership”.
Once an artist completes their work — they would post it safely on the blockchain. The power of encryption grants them ownership of the art as unchangeable public record. This process would also result in a significant improvement in efficiency. Artists will no longer have to deal with multiple middle-parties clogging up the system. They will no longer have to wait for royalty advances, releasing the music when and how they please so they can earn at their preferred rates. They can now truly become entrepreneurs!
Whereas the traditional model centralized the key resources (such as distribution) making the artists automated cogs within the machine, blockchain automates away the center allowing the artists to work directly with their customers (or in this case fans) as owners of their work.
Become the business, man.
“Buy a place in Dumbo before it is Dumbo”
“I bought every V12 engine / Wish I could take it back to the beginnin’ / I coulda bought a place in Dumbo before it was Dumbo For like 2 million… That same building today is worth 25 million / Guess how I’m feelin’? Dumbo”
Jay is obviously upset at his younger, less mature self for wasting resources on depreciating assets and luxurious expenses (cars, strip clubs, alcohol and parties). Throughout the album he scolds young Jay for not making smarter moves with his money.
Well guess what Jay? — even if you were able to go back in time, you would still never really have true ownership of this real estate. Property title registration and ownership requires trust in local government entities as a middle party. Title ownership is held in centralized government databases where they hold full control of this ownership. Without proper proof of ownership which is in your control — landowners are often unable to secure loans against their property for development, building permits or even worse, face the risk of expropriation. This inefficient structure also poses high barriers to entry. Extravagant commissions, fees and taxes are due up-front to feed this unstable and inefficient system.
Proof of ownership through the blockchain negates the use of the government as a third party and provides full control of ownership where it belongs. The taxes and fees up front are no longer required to be paid to inefficient middle-parties. Most importantly, no central party controls this right — It is public record, it is immutable and will forever change property ownership.
To sum it up…
Jay’s vision of financial freedom through entrepreneurship and capitalism can only truly be harnessed with the blockchain. The blockchain breaks our dependencies on third parties who currently control and restrict the systems of ownership throughout the world. It gives you back the control, protects it with immutability and is available to a wider audience at significantly lower costs.
Financial freedom is only possible when you control proof of ownership of your assets. Jay — you’ve now got the tools to do it.
“We all screwed ’cause we never had the tools / I’m tryna fix you / I’m tryna get my friends with no stripes to be official”