Imagining the future, or “My Roomba just bought a Picasso with Bitcoin!”
We are living in a fast-paced, constantly-accelerating world full of technological and financial innovation. Artificial intelligence, crypto-tokens, cybersecurity, gig economy and many other concepts are confusing at times, but also extremely thought provoking. The following three-part series is a gedankenexperiment, or, more accurately, an “imagination run wild” on the potential of fractional ownership, autonomous agents and the role of blockchain in enabling this future.
Part 1 — Fractional Ownership
“A thousandth of my kingdom for a quarter of a horse!”
What does it mean to “own” something? At its core, it means to have exclusive rights and control over property. By owning an apartment, I can decide who will live there and on what terms. By owning a music CD, I can listen to the music in my car. By owning a share in a company, I can participate in decision making regarding its future.
Today, it can be very difficult to divide ownership of a physical asset in the real world or even digital assets into fractions that belong to multiple owners. Due to various legal, financial and practical reasons, assigning ownership of an asset to multiple stakeholders and managing ownership transfers is truly challenging.
But the appeal of fractional ownership is very strong, especially for investment purposes. It allows a greater diversification of investment, lowering the dependency on any specific asset and the overall risk. Let’s take real estate as an example. If you own the house you live in, you’re probably happy to be the sole owner. However, if you own a second property as an investment, you might want to split ownership with other investors, while acquiring partial ownership in other assets. This is the appeal of real estate funds and REITs.
The same concept can apply to virtually any asset — paintings, website domains, antique cars, collectible figurines and much more. For some types of asset, such as digital assets, the process is easier to achieve. For example, we can look at how record labels and artists copyright their music and split both ownership and revenues across multiple owners. However, it can still be a difficult and costly process to trade ownership in some cases.
One can imagine a not-so-distant future, when an individual could choose to own 1/10,000th of a Picasso painting, 3 square feet of Central Park, and 0.02% of the music rights for a Beatles song. To make this a reality, we need to be able to register the ownership of an asset, as well as the ability to trade it seamlessly. It would create an opportunity for a much more flexible economic system, with new investment opportunities and fewer disputes, which can be extremely costly and time consuming.
In order to make the above possible, we need the supporting technology. One such promising technology is a trusted ledger that is decentralized, meaning that there is no need to rely upon a central entity to control the ledger. This is crucial, since a central entity is susceptible to influence by financial, political and other interests. Without an overarching power that is able to control or skew decisions towards their own interest, a new economy can emerge, where trust, security, and simplicity make ownership democratic and fair — for every owner, regardless of the size of their share of ownership.
The second piece of technology required to make this happen would be a market, which would include a marketplace and the relevant currency to trade assets. This would enable to convey the intent to change ownership, which would be registered in the ledger when assets or their fractions are traded.
It is important to mention that there are many potential rights derived from ownership besides financial gain. For example, a taxi driver might have the right to use a car for a specific amount of time without owning the vehicle or the taxi license. Or, if you live in a specific location, you might have passage rights on specific roads and areas in your neighborhood. While we often bundle together all the rights derived from a specific asset ownership (income, usage, passage, naming etc.), we could, theoretically, divide those rights and trade them separately. This creates a more complex legal and financial ownership matrix, yet this type of fractional ownership could also nurture new business models and opportunities. In many ways, this isn’t completely new as there are some industries in which is normal for different people to own different rights with regards to the same asset. For example, a writer might have authorship rights, which entitle him to be credited when some of his work is referenced or quoted, but the copyright and revenues from selling his work might belong to a publishing house.
A lot of attention regarding fractional ownership is currently focused in property investments and equity, but there are companies exploring the tokenization of various other assets. For example, a virtual art gallery called Maecenas is preparing to sell tokenized fractions of paintings. It will be interesting to see which other industries, assets and products start leveraging the concept of fractional ownership by employing the blockchain technology. The opportunities are endless — if you want something you could soon (partly) have it.
In part 2 of this series, we will explore ideas of how autonomous agents can operate in future, interacting with us and with each other.
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Hexa Labs is a dedicated blockchain solutions consultancy. Our multidisciplinary team helps established enterprises and global brands explore new business applications of blockchain. Together, we manifest the highest potential of blockchain-enabled disruption in the world economy.
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