We're nearly finished with our look at the seven design principles underlying blockchain. Our sixth principle, is the preservation of rights. All of us are born with certain inalienable rights. Rights we should and can protect. Ownership rights should be transparent, they should be enforceable. Individual freedoms need to be recognized and respected. Smart contracts are an instrument for protecting, and enforcing those rights. The problem that this principle solves is preserving our ownership rights without impinging on our freedoms. As the Internet became a medium for new forms of communication, it became a venue for the presentation of poems, songs, stories, photographs, audio and video recordings, and so on. We adapted laws and standards developed for the physical space into the online world. But even so, we had to trust middlemen to manage transactions online. They had the power to deny, delay or declare transactions only to reverse them later. In this migration of existing laws into online practices, legitimate rights got trampled. The rights not only to privacy and security, but also free speech, reputation, and equal participation. People could anonymously censor us, defame us or block us at little cost to themselves. Even as the Internet helped establish intellectual property rights, there was little risk to ignoring them. Filmmakers who were dependent on revenues from films released decades earlier, saw their revenue stream dry up as their fans uploaded digital files for others to download for free. The blockchain breakthrough is strengthening property rights by making them inarguable and unforgeable. On a blockchain like Bitcoin, the proof of work required to mint coins, also timestamps transactions. So, only the first spend of a coin will clear and settle. Using public key infrastructure, the blockchain not only prevents a double spend, but also confirms ownership of every coin in circulation. That's why you can't trade what isn't yours on a blockchain. Whether it's real property, intellectual property or rights of personhood. Unless the people who create content participate in its distribution and profit from it, the Internet will fall apart. Every time people have lost the rate of participation, they've taken it back and broke the system that stole it. As a ledger of everything, the blockchain can serve as a public registry through such tools as Proof of Existence, as site that creates and registers cryptographic digest deeds, titles, receipts or licenses on a blockchain. Proof of Existence doesn't maintain a copy of any original document. The hash of the document is calculated on the user's machine not on its site. That ensures confidentiality of content. Even if a central authority were to someday shut down Proof of Existence, the proof would remain on the blockchain. Of course, plenty of intellectual property and physical property for that matter has multiple owners with complex rights, and blockchain has a mechanism to handle more complex transactions involving bundles of rights or multiple parties. The mechanism is the smart contract. Smart contract is just like what it sounds like. An agreement that self executes, kind of like a contract with a software, lawyer, bank and the government inside it. Think of it as a piece of special purpose code, that encodes an agreement between parties and is based on certain conditions that execute a complex set of instructions. Another way of putting this, it's a fleshing out of legal instructions executed by software. We spoke with Steve Omohundro, the president of the think tank, Self-Aware Systems. He predicts smart contracts will become more and more common. We're learning how to put our code of laws, into well, into computer code. The idea is to let software determine the legal course of action, whether the action is between persons, businesses or even countries. One thing a smart contract can do is provide a means for assigning usage rights to another party. As a composer might assign a completed song to a music publisher. The code of a contract could include the term or duration of the assignment, the percentage of royalties the composer should be paid, and some triggers for terminating the contract. One possible termination clause could be if the composer's account received less than X amount of cryptocurrency in a consecutive 30 day period, then all rights could automatically revert back to her. The publisher would no longer have access to her work. To set the smart contract in motion, the composer and the publisher would each sign using their private keys. Smart contracts could also handle difficult rights of shared resources among the community. Some authorized users might only be able to access and withdraw resources. Other people might have those rights but could also exclude others from access. Certain proprietors would hold management rights beyond access and exclusion. At the top would be the owners, who could access, use, exclude others, manage, and sell the resource. Companies like Personal BlackBox, apply those rights to our personal information. By using blockchain technology, Personal BlackBox enforces people's rights to extract value from their personal data; data which could benefit others or everyone. Data generated and sold willingly will be better. It'll be more useful information than what a company can frack secretly from our online lives. We can use smart contracts to share or withhold it as we wish. So what are the implications of how blockchain treats personal rights? To enforce rights, those rights must be clear. Rights and responsibilities can be codified in a smart contract and placed on a blockchain. In that way, the necessary decisions and incentives will be transparent and they'll be reached by consensus. Now, to be sure, this is not simply about technology, it's much bigger than physical assets, intellectual property or any privacy tools. We need better education about rights and we need to understand rights management systems better.
