Social and physical ownership

NFTs introduce a new sense of ownership, but NFT-ownership is a different sort of ownership than what you get in the physical world. It’s not an intuitive sort of ownership.

In the intuitive sense, I might make a .txt file that sits on my desktop and I own it. I own the physical hardware, I made the data, it’s mine. That’s very clear.

Through the internet I can move that file around, and people who download it can own it too. There’s no difference between the copied downloaded version and the version on my desktop. But both I and the people that download the file feel they own it because it’s on their local computer. If it’s on a shared server somewhere, I don’t feel as strongly that I own it; for example I don’t feel like I own a Spotify playlist but I do feel like I own a folder of mp3s. Ink and Switch produced an excellent essay about local-first digital ownership .

So what does ownership mean when applied to NFTs? It seems like it’s something more to do with a social version of ownership. Of all the things floating around the internet, here is a way to say “that is my thing”. In this case “my thing” isn’t the sort of ownership I described above, it’s a more social form. It’s everyone else saying “I trust this system, this system says you own it, so you own it”. Other people can have the same file that I have, it just happens that there’s this independent system that lets everyone know that the file is mine within the abstract world of all files. The file itself can exist outside of that, physically on someone else’s computer.

NFTs introduce a different kind of ownership than the conventional sort you might expect when it comes to objects. It’s much more social and less physical. Obviously in the real world social and physical intertwine, but in digital-land not so much.

This note was originally a response to Vin’s NFT essay update .

On social ownership

Vin responded with some notes of his own.

I agree with his sentiment here that this form of NFT ownership is different than local media ownership, but I think, based on my current understanding, suggesting that it is only a social signal, massively narrows the functional potential of what an NFT is. Hm, but maybe it is a social signal, and I’m narrowing the functional potential of what a social signal is.

I think it’s worth expanding a bit more on what social ownership really means, since I only really wrote about it in relation to NFTs. I’ve been thinking about it more in relation to the physical world as well.

Social ownership applies both to NFTs and in the real world. The reasoning “I trust this system, this system says you own it, so you own it” is equally true of the physical world as it is the web3 world. Laws and government provide a basis for enforcing ownership. Many complex sorts of transfers of ownership are only possible because of a social system (others believe you to be the owner) acting in tandem with a system of enforcement (others back up your ownership when necessary).

The physical world has both of these systems, tied together with laws of ownership. NFTs have laws of ownership and transfer too; there are very well defined mechanisms for bidding and transferring ownership of assets. There’s also social system where others will acknowledge you to be the owner through co-acceptance of the underlying system. The missing piece, though, is the enforcement mechanism. There’s nothing stopping someone from downloading the jpg NFT you “bought”; it’s in this sense NFT ownership is extremely unintuitive. You haven’t bought the jpg itself.

The missing part of digital ownership isn’t an unsolvable problem. In fact it’s not terribly difficult to solve, it just requires reconsidering what’s being bought. If it’s the case that you think you’re buying a jpg, there’s a problem. A file like a jpg can be moved around and copied in all the ways described above, making you feel like its something that you can still own even without the NFT. However, consider a case where the NFT is the native token of ownership: there’s no distinct jpg. Rather, the NFT serves as an identity, say, something far less object-like than a file.

This is the model used by Urbit , in which the NFT is a key to an entire digital world that exists without an existing parallel object to be owned. The NFT is a native certificate of ownership; the social, mechanical, and enforcement portions are all integrated.

I tend to think this is where the real potential lies. NFTs can be a powerful system of ownership for digital-native goods and services that don’t include artifacts with parallel ownership structures.