The Value of Digital Assets

Oluseyi Akindeinde
Sep 2, 2018 · 5 min read

One of the most important inventions in software development and overall computing is “copy and paste”. This has saved a lot of people a lot of time. You can copy and paste just about anything.

However, it is for this same reason that digital files lack material value. They lack the key component necessary to uphold scarcity.

Think about this for a minute: anytime you download a music file (MP3) from the Internet, or buy an ebook from Amazon or watch a video on YouTube, all you are really doing is listening/reading/watching a copy respectively. The owner of that song, book or video uploaded just ONE copy on the Internet and it doesn’t matter if the song was downloaded one million times or the video had one million views, they are all just multiple copies of ONE file.

Let’s take a step back to how it was some years ago prior to computing and the Internet.

If you wanted to listen to music, you would buy the physical CD, for movies, you would get the videotape or DVD and for books you would buy the hardcopy book. Artists and Publishers were not printing ONE copy, they were printing as many physical copies as they could sell. This had real tangible value as each CD, DVD or book could be priced individually. With the advent of the Internet, all we have are vanity metrics (such as the number of downloads or views) very little monetization.

What this means is: digital assets inherently have NO value.

Now Imagine someone came up with a breakthrough technical solution that allowed for digital assets to take on the properties of a physical one. Imagine for one second that every single book bought or video watched online, though electronic was an original. That is, instead of merely downloading a copy, the technology allowed the complete transfer of that ebook, MP3 file or the video file to your computer or phone. It also means that if you transferred that book/MP3/video file from your computer or phone, you didn’t retain a copy except you bought two copies. Just as it is when you buy a hardcopy book or physical CD and hand it over to someone else, you would no longer have that book or CD.

How do you think this affects to the ecosystem?

It changes the game as digital assets can now take on some real tangible value. It means that if your YouTube video gets a million views, you would have uploaded a million different copies of the video to YouTube or if your ebook was downloaded a million times, a Million unique copies of the ebook was uploaded to Amazon as it would be in a real life bookshop. This would create massive opportunities for content providers to monetize their intellectual property and further curb piracy as people won’t be able to just “copy and paste”. It means all the DJ’s in the world who need to play your song at events need to own their own personal copy of your MP3 file.

What value would you place on this piece of breakthrough technology?

Also imagine for another second that the technology allowed you at any point in time to know the number of people who own your book or CD and also track movement from one person to another in a transparent manner? This would be priceless.

With this technology in place, a popular artist like Beyonce can then say she’s only ever going to release a certain number of copies of her forthcoming album — creating material demand.

What I have just described is the technology that powers Bitcoin — the blockchain.

Bitcoin (and by extension other blockchain assets) is the ONLY digital asset ever that you cannot simply “copy and paste” and it derives its value from just this simple concept. Once you ‘give’ it to someone, it is gone and gone forever. Just like a real physical bill only it is digital — and guess what — unlike with a physical bill, it can be moved/transferred across the Internet, and there will only ever be 21 Million units in circulation. Ever.

So not only can it be transferred across the Internet to anyone, it is inherently a scarce commodity. 12.5 BTC is being released into circulation every 10 mins. There are already over 17 Million BTCs in circulation. By the year 2040, over 99% of total Bitcoin would already be in circulation. The very last satoshi (the smallest unit of BTC) will be released in the year 2140.

This is the reason BTC has tremendous value. That value will only increase as time passes. By the way, every 4 years, the number of BTCs released every 10 mins is halved. By the year 2020, only 6.25BTC will be released every 10 mins, year 2024 only 3.125BTC etc halved every 4 years until we get to the year 2140.

Now, I don’t think I will be around by 2140 (thats over 120 years from now) but I am 100% certain of one thing. By 2040 (22 years from now). Bitcoin will be a valuable digital asset. It is pretty much immaterial what people say now. It is probably for this reason too that it is serving more as a store of value than a payment system. People just aren’t spending their BTCs. They are HODLING for the long term.

It is also for this reason I started accumulating BTC and other blockchain assets three years ago. And just from the technology stand point, It is a no-brainer really.

You see, if you own BTC or any other digital asset, it isn’t stored on your computer or phone. It is stored on the immutable blockchain ledger where it can never disappear even if you misplaced your phone or crashed your computer hard disk — as long as you have your private key in safe keeping.

If you can memorise your private key (in most wallets it’s just a set of 12 words), you have what is called a brain wallet. Your money is stored in your head, literally — sci-fi sturvs. It is completely borderless and censorship-resistant — digital asset like no other.

Before 2009, banks held funds in trust for us and subsequently determined when or how we interacted with our money. Bitcoin puts you in firm control (through your private key) and you might just get really wealthy in the process.

I leave you with this tweet from the South African serial entrepreneur and multi-millionaire Vinny Lingham…

Coinmonks

Coinmonks is a non-profit Crypto educational publication. Follow us on Twitter @coinmonks Our other project — https://coincodecap.com

Oluseyi Akindeinde

Written by

Coinmonks

Coinmonks

Coinmonks is a non-profit Crypto educational publication. Follow us on Twitter @coinmonks Our other project — https://coincodecap.com

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