Historical Arrangement of Ownership and Use Rights【Part I】
NFT's Ownership Revolution in the Digital Age
Good morning.
I am mitsui, a web3 researcher.
Every Saturday and Sunday at noon, we update the web3 Basics Report. This week we will be discussing the "Right of Use of Ownership".
Introduction: Why Understanding Ownership and Use Rights is Essential to NFT
Ancient - Modern: Establishment of ownership of land and real estate
Since the Industrial Revolution: Patents, Copyrights, and Licensing Mechanisms
The Digital Age: Music CDs and Distribution Services, DRM, and the Subscription Model
Difference between ownership of "objects" and "data
Trust and stability that ownership provides to society
Introduction: why understanding ownership and use rights is essential to NFT
In today's society, the Internet and digital technology have become the foundation of our lives, and the physical reality and the digital world are merging seamlessly.
In recent years, NFT has attracted particular attention. Phenomena such as digital art being traded at high prices and land in the metaverse being bought and sold are not just transient booms, but have the potential to fundamentally change the concept of "ownership" in the digital age.
However, the debate over NFTs often leads to confusion.
There is no end to the misconceptions that "since I bought NFT art, I should also get the copyright," and "how can I say I can own digital data when I can so easily copy it?" The main cause of this confusion is the confusion between the different concepts of rights: ownership rights to physical "objects" that we have long been familiar with, usage rights (licenses) that allow us to use digital content, and copyrights that protect our creations.
For example, when we purchase a physical book at a bookstore, we take ownership of that book. The book is our property and we are free to read it again, lend it to a friend, or sell it to a used bookstore. However, the copyright to the content of the book, the story and knowledge created by the author, still remains with the author or publisher. Buyers are not allowed to copy and sell the contents of the book without permission or to publish it on the Internet. Two different rights exist here: ownership of the physical medium and copyright of the content as information.
On the other hand, if we purchase an e-book as a download, the situation is more complicated. We feel that we have paid a price and "purchased" the e-book, but what we have legally obtained is only the right to use the content to view it on a particular platform. If the platform terminates its service, we may not be able to read the e-book we would have purchased, and we usually cannot rent or sell it to others. The "purchase" here is a fundamentally different contract than the transfer of physical ownership.
NFT is an attempt to provide a solution to the ambiguous "ownership" situation unique to the digital age using blockchain technology. This paves the way for previously difficult to prove the rarity and authenticity of digital items, allowing them to be traded and transferred in the same way as physical objects.
However, the "digital ownership" brought about by NFT differs neither from traditional physical ownership nor from mere usage rights: purchasing NFT does not necessarily transfer the copyright to the digital content. To properly understand this new form of ownership, we must first unpack how "ownership" and "use rights" have historically been formed and distinguished, and how the evolution of digital technology has affected these concepts.
In the first part, we will overview how humans have acquired the concept of ownership and how intangible property rights such as copyrights and licenses have developed since the Industrial Revolution. It will also clarify the difference between ownership of "objects" and "data" in the digital age, and discuss the role that property rights play in society. In the second part, based on these historical and conceptual arrangements, we will delve deeper into NFT technology, specific use cases, and the challenges facing NFT and its future prospects.
Ancient to Modern: Establishment of ownership of land and real estate
The concept of ownership is a right that we take for granted today, but it is by no means universal. It is a social consensus and a legal system that has been gradually formed and established through social transition, development of economic activities, and political struggles over the long history of humankind.
The most important object in understanding the history of property rights is land. Since land could not be moved, was the basis of production activities, and was a resource essential to the survival of humankind, who controlled and used it was decisive in shaping the social order.
In ancient societies, land and resources were not the exclusive property of a particular individual, but were shared by tribes and communities. However, with the onset of agriculture, mankind became sedentary. The harvest from the land one labors to cultivate is one's own, and the desire to prevent others from taking it away from one's self gave rise to property rights.
It was ancient Rome that laid the foundation for modern ownership. Roman law defined ownership (dominium) as "complete dominion over a thing. This includes the right to use the thing, to derive income from the thing, and to dispose of the thing.
Importantly, Roman law viewed ownership as an absolute and exclusive right belonging to the individual. This concept would have a profound influence on the legal systems of later European countries.
In the feudal societies of medieval Europe, ownership was again complicated. A hierarchical structure was formed in which all land theoretically belonged to the king, who granted land to the lords, and the lowest peasant farmers cultivated the land. This was what could be called "divided ownership," with multiple entities holding different rights to a single piece of land.
It was the Civil Revolution of the early modern period and into the modern era that led to a major transformation in this feudal way of owning land and the establishment of modern property rights. Enlightenment thinkers asserted that property rights were the natural birthright of human beings and the foundation of freedom and equality.
The Declaration of the Rights of Man and Citizen (1789), adopted during the French Revolution, declared that "the right of ownership is a sacred and inalienable right." It was intended to overthrow feudal privileges and guarantee the right of individuals to freely own and trade in property.
Subsequently, modern ownership was established as an exclusive and absolute right of control over a specific object (mainly a tangible object such as land or movable property). An important system of registration was then developed to guarantee this right throughout society.
Real estate registration is a system for recording information about who owns which piece of land in a public ledger and making it publicly available. This has enabled the safe and smooth transfer of ownership and has become an indispensable infrastructure for a functioning market economy.
Since the Industrial Revolution: How Patents, Copyrights, and Licenses Work
While modern property rights were primarily concerned with tangible objects, the Industrial Revolution created a new form of property that could not be captured within the conventional framework. These are the inanimate objects that result from man's intellectual and creative activities: ideas, technologies, and works of art. Since these intangible properties have no physical form, it has been difficult to apply the traditional concept of ownership to them as they are.
If these intangible properties receive no protection, inventors and writers who invest their efforts will soon be imitated by others and will lose the incentive to create. This could hinder the technological progress and cultural development of society as a whole.
In order to protect such intellectual creative activities and promote innovation, a new system of rights called Intellectual Property Rights (IPRs) has been established. The most representative of these rights are patent rights and copyrights.
A patent is a right to protect a new technical invention. In exchange for making the invention available to society, the inventor is granted exclusivity for a certain period of time. This guarantees the inventor the opportunity to recover his/her investment and profit, while at the same time the technical information disclosed to the public is accumulated as knowledge for society as a whole.
On the other hand, copyright is the right to protect cultural and artistic creations such as literature, music, and art. 1710, the Queen Anne Act was enacted in England, granting authors the exclusive right to reproduce and publish their works for a certain period. This is considered the world's first modern copyright law that recognizes works as the property of their authors and protects their rights.
Both patent rights and copyrights are similar to the ownership of tangible objects in that they are exclusive rights of control over an intangible object. The crucial difference, however, is that the rights are finite in time.
Intellectual property rights expire after a certain period of protection, and the invention or work becomes public property (public domain) and can be freely used by anyone. This is a mechanism to balance the interests of the individual creator with those of society as a whole.
The establishment of these intellectual property rights has given rise to a new business model: licensing.
A license agreement is an agreement in which the right holder (licensor) permits another party (licensee) to use its intellectual property under specific conditions (term, region, method of use, consideration, etc.). This has facilitated the distribution of intellectual property and led to the creation of a wide variety of products and services.
The Digital Age: Music CDs and Distribution Services, DRM, and the Subscription Model
The rapid development of digital technology and the spread of the Internet from the end of the 20th century to the 21st century have fundamentally changed the way information is distributed and consumed. This change has also had a profound impact on the relationship between ownership and usage rights, shaking our perceptions of how we own and use "goods" and "content. The case of the music industry is very instructive in understanding this transition.
In the analog era, music was recorded and sold on physical media such as records and cassette tapes. The act of purchasing a record meant that the consumer gained ownership of the physical disc. The owner was free not only to play the record, but also to lend it to a friend or sell it to a second-hand store.
CDs, which appeared in the 1980s, were also a physical medium, and their transaction was treated as a transfer of ownership, much like records. However, the situation changed dramatically in the late 1990s and early 2000s with the widespread use of digital audio compression technologies (e.g., MP3) and the Internet. Digital data could now be instantly made into countless copies and sent around the world via the Internet without any degradation in quality.
To combat this situation, the music industry has taken steps in two directions.
One is the introduction of Digital Rights Management (DRM) technology, which is designed to prevent and restrict unauthorized copying of digital content, but which has also caused significant consumer convenience problems, such as excessive restrictions on the use of content that has been legitimately purchased. However, it has also caused problems by severely impairing consumer convenience, such as excessive restrictions on the use of content that was legitimately purchased.
Another response is the launch of legitimate music distribution services. The pioneer of this model was Apple's iTunes Music Store. However, even in this download sales model, the rights acquired by consumers were in many cases merely usage rights (licenses) to use the content under certain conditions. Unlike ownership of a physical CD, resale or transfer is not permitted.
Then, in the 2010s, mainstream music consumption shifted to a subscription model, with services such as Spotify and Apple Music offering unlimited access to a vast library of songs for a monthly fee. In this model, consumers no longer own the content. What they have is the right to access and use the content on the platform for the duration of the service. Once they stop paying, they no longer have access to any content.
This trend proceeded not only in music, but also in other digital content areas such as movies, books, games, and software.
The shift from "ownership to use" is accelerating in many areas. While this shift has brought many conveniences, it has also made the concept of "digital ownership" extremely ambiguous.
There is a huge disconnect between our "sense of ownership" and the reality of our legal rights.
Difference between ownership of "things" and "data"
As a prerequisite to considering "digital ownership" brought about by NFT, it is necessary to reiterate the difference between ownership of "things (tangible objects)" and the treatment of "data (intangible objects)" in the conventional legal system.
The legal systems of many countries, including the Japanese Civil Code, have been built on the premise of the physical, real world. Under the Civil Code, property rights are established only for "tangible objects.
Tangible objects are those that occupy a portion of space and can be perceived by the human senses. These tangible objects have the following characteristics
ExclusivityA tangible object can only exist in one place at a time.
Finiteness and scarcity (Scarcity): Tangible objects are finite and production is costly.
Transferability: Ownership can be transferred to another party by physical delivery or registration.
Digital data, on the other hand, is information recorded electromagnetically and has no physical substance. Therefore, it does not fall under the category of a "thing (tangible object)" under the Civil Code and is not subject to ownership rights in principle. Data, on the other hand, has characteristics that contrast with those of tangible objects.
Non-exclusivity: Can be used by an unlimited number of people simultaneously.
Replicability: Perfect reproductions can be made at little or no cost and with no deterioration in quality.
Ambiguity of relocation: If you transmit to others, it is ambiguous whether you have "transferred" or "duplicated".
Thus, in the traditional framework, digital data has been treated as an object of "use" rather than an object of "ownership". Often when we "own" digital data, we either have ownership of the physical medium on which the data is recorded or we have usage rights to access the data.
This difference in the legal treatment of "objects" and "data" has created various challenges in the development of the digital economy.
An example is the absence of a second-hand market. Physical books and CDs can be bought and sold on the second-hand market as a transfer of ownership, but in the case of digital content, most are transactions of usage rights, and since the terms of use prohibit resale or transfer, no second-hand market is established.
Trust and stability that ownership provides to society
Why is the institution of "property rights" so important to human society? It is because it is an extremely important social and economic infrastructure that maintains social order, promotes economic activity, and guarantees individual freedom and dignity.
First, property rights contribute to maintaining peace and order in society. If property rights were not established, people would be constantly at risk of having their property taken by others, and society would be dominated by chaos and violence. By legally guaranteeing exclusive control over property and prohibiting others from encroaching on it, property rights systems reduce conflict and bring about social stability.
Second, ownership increases the efficiency of economic activity and promotes economic development. If people are guaranteed that they own the fruits of their efforts, they will be motivated to work harder and invest more. If ownership is insecure, long-term investment will not take place and the economy will stagnate.
Third, property rights enable the security and facilitation of transactions in a market economy. Markets are built on the exchange of goods and services, and unless it is clear to whom the goods subject to a transaction belong, transactions cannot be conducted with confidence. The system of ownership clarifies the location of rights and makes transactions safer.
Thus, the property rights system is the fundamental system upon which our society and economy function. It is a social consensus that has been refined over a long history to create trust and stability.
However, with the transition to the digital age, the foundations of this supposedly strong ownership have begun to shake. Despite the growing importance of digital data in our lives and economic activities, clear ownership rights to it have not been established. Our digital assets and identities are under the control of specific platform operators and are granted only usage rights.
web3 and NFT attempt to address this challenge of absent ownership in the digital age through the use of blockchain technology. Blockchain makes it possible to prove the uniqueness and authenticity of digital data and to clearly record who "owns" it exclusively.
This is an attempt to realize the role that the registration system has played in the physical world in the digital space without relying on a centralized authority.
The second part of this article will take a closer look at this NFT.
Disclaimer：I carefully examine and write the information that I research, but since it is personally operated and there are many parts with English sources, there may be some paraphrasing or incorrect information. Please understand. Also, there may be introductions of Dapps, NFTs, and tokens in the articles, but there is absolutely no solicitation purpose. Please purchase and use them at your own risk.
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mitsui
A web3 researcher. Operating the newsletter "web3 Research" delivered in five languages around the world.
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The author is a web3 researcher based in Japan. If you have a project that is interested in expanding to Japan, please contact the following:
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*Please note that this newsletter translates articles that are originally in Japanese. There may be translation mistakes such as mistranslations or paraphrasing, so please understand in advance.