The Assorted Case for Metaverse Property Rights
The metaverse is the progression of the internet into the more meaningful sum of various experiences, activities (playful and non), and most importantly, inhabitants, into a globally interconnected network.
Communities create history through novel means of coordination.
No more so do we currently find such uncharted territory for novel coordination than in the metaverse, the sum of all narratives in digital evolution. Waiting to be settled, conceived in minds, and birthed in code.
But when the world of imagination becomes a reality, how it’s governed becomes increasingly vital, and the protection of fundamental rights (property rights and privacy) should scale in tandem.
Unfortunately, this has not happened thus far, and early aggregators have already begun to exploit the citizens within them; left unchecked, this will only get worse.
Fortunately, technology has never been deterministic, and history has often shown us that the long-term moat for general aggregation isn’t wide, especially when access to alternative coordination technology becomes permissionless.
Background:
This essay has been adapted from a more extensive series on why the open metaverse is inevitable, essential, and closer than you might think.
If you would like some more background please see the following essays and an accompanying enjoyment guide.
- An Ideological Primer to the Metaverse
- A Humanistic Metaverse
- Ownership, Exploration, and Persistence
- [Meta] Surveillance and Control
With that out the way, let's get into it:
Here is a small index of what will be covered if you wish to target your experience.
In case it isn’t obvious, true property rights or privacy in the open metaverse would not be possible without crypto, and so without those, we would not have any of the subsequent benefits we get from property rights that will be discussed throughout.
PART 1: Property Rights = Innovation [below]
PART 2: Property Rights = Cultural Explosion, Proxy Autonomy, and Privacy
PART 3: Property Rights = Emergent Worldbuilding
PART 4: Property Rights = Novel Self-Actualisation
If you are already familiar with the value of digital property rights and their relationship with supercharging innovation, I recommend skipping on to the next part of this mini-series.
Part 1: Property Rights = Innovation
Why property rights?
From Ancient Greece to modern Western society, robust property rights have served as a barrier of protection from excessive control and an incentive for development. The importance of formal and robust property rights in developed societies and how they serve in unlocking ‘dead capital’ and protecting individuals is largely understood.
When you have a clear title to land (with reduced possibilities of arbitrary confiscation), you are incentivised to improve (and create more economic flows) or begin to borrow against it.
TLDR: Ownership = incentives = progress.
Wen digital property rights?
No more so is a lack of ownership, standardisation and governance prevalent than in our digital experience. True ownership (the right to use, profit, control, transfer and exclude) of goods and presence has, until recently, been extremely limited.
Enter NFTs, encapsulating complicated ideas of ownership into simple, standardised computing primitives. Like meatspace property rights, standards will evolve over time to deal with different asset types.
Now, with a clear path to digital ownership, trust(lessness), and incentives (replacing violence) the unlock of value and rights protection begins to emerge.
Digital Property rights = more innovation?
Much has been written about the unique ability of internet-enabled economic systems to unlock value where it otherwise wouldn’t have existed, creating money out of nowhere. But, as mentioned elsewhere, the extent of this has been curtailed in recent years.
Much has also been written about why such centralised platforms transition to stifle innovation over time. As they grow, powerful network effects enable high pricing power and increased switching costs, facilitating excessive take rates. Over time, the platforms transition from positive-sum (attract and cooperate) to zero-sum (extract and compete).
In short, serving as a rent-seeking (on the backend), limiting growth and serving as risky grounds for innovation that will only continue in more closed instances of the metaverse (<10 companies control nearly all digital economies).
How to stop the exploitation of network effects and first-mover advantages in the digital realm?
Due to the factors mentioned elsewhere, normal bureaucratic pen-pushing may struggle. Alternatively, with significant innovations surrounding novel ownership primitives, new business models can be tested while old ones waver.
Cryptonetworks, acting as quasi-private/public goods providers (general purpose or application specific), provide a more neutral and robust design space (or computing platform) to enforce property rights and support innovation. Take rates are limited by decentralised governance (on and off-chain), open-source nature (forkable), distributed ownership (network effects can accrue to the community with novel incentives), lowered switching costs, and reduced barriers to exit.
Instead, applications will provide access to the underlying network but won’t control it; take rates can exist, but much closer to the free market rate.
Competitive revenue can and will still be achieved through superior service (or experience) provision rather than anti-competitive practice at the expense of the consumer.
If you got this far, you might be thinking: I don't wanna exist in no goddam extractive and closed metaverse; I want cryptographically ensured property rights and sensible take rates in an open metaverse… I would agree.
For a cultural explosion, governance and privacy… Next Stop: Property Rights = Neo-Renaissance, Autonomy, and Privacy
