Blockchain, Data, and Tokens: The Building Blocks of the Ownership Economy
- NFTs have shown us what it means to own our assets.
- To truly enable an ownership economy on blockchain we must increase the diversity of assets that NFTs can represent.
- At Oasis Labs we’ve released a primer detailing our plans to expand the scope of our Parcel API product to include data tokenization.
- With the Parcel API, individuals, creators, and businesses will be able mint NFTs called Data Tokens that are backed by valuable digital assets with intrinsic value.
- These improvements to Parcel expand the capabilities of the Oasis Network and ROSE to support a powerful new Ownership Economy.
Building an Ownership Economy
Creators and individuals produce most of the value on platforms today — whether its via the data they create or the content they produce. What seems to be an unstoppable trend is still held back by one critical flaw: at some point, the underlying platform can pivot from cooperative behavior and turn to exploiting individuals and creators alike for the sake of higher profits.
Thanks to blockchain, it’s now possible to program incentives and distribute merit-based ownership to both creators and users who believe in each other. In recent months we’ve seen digital art, and their NFTs conferring ownership, sold for hundreds of thousands, sometimes millions of dollars. To date these tokens have represented ownership of relatively simple assets, art, music, etc. making their value largely speculative and predicated on a belief that they will have social and historical value. While our attention has been grabbed by large price tags and trendy memes, we often overlook the importance and potential of NFTs as an enabling technology: the link between NFT’s and Data, not just the ownership of the NFT, dictates the value that the NFT represents.
Expanding the scope of NFTs to represent more diverse set of assets requires to overcome two technical hurdles.
First, we must enable NFTs to accurately represent real-world value on chain. This is critical because it will allow us to buoy blockchain assets to real-world assets — extracting more meaningful value for both. For example, an NFT representing an individual’s financial data would be very desirable to lenders, analysts and credit scorers in the blockchain space looking to improve their predictive models and offer more compelling services. The opportunities here are endless, but to solve it we need trusted onramps for off chains assets that reliably represent said assets on chain.
Second, we must ensure that ownership is meaningfully preserved for the NFT holder. The current NFT market relies on buyers accepting that there might be many copies of their digital asset, and that they own the “original” instantiation of that asset. This is fine for digital art, but if you’d like to mint an NFT for say, your bank account, others being able to copy it would quickly devalue your data. Thus we need an NFT that doesn’t just convey ownership, but also access, control, and ultimately privacy.
We’ll argue that Parcel, the product pioneered by Oasis Labs and built on the Oasis Network, combined with our new proposal for a Data Tokenization engine can be the solution to both — but let’s look at it one challenge at time.
Representing Real Value
First let’s take a closer look at Parcel. Put simply, Parcel is an SDK that allows you to do a few key things:
- Upload & store data
- Process said data in a confidential compute environment (more on that later)
- Set permissions on how data can be accessed and what it can be used for
- And under a our new proposal, Parcel’s functionality would be expanded to also enable minting a “data token” that confers ownership and access control to an entity
Parcel stores data with immutability (aka data can’t be changed), with high audibility, and backs everything by the Oasis Network. Plus its very easy to integrate into apps, making it an ideal option for “mainstream” application developers to integrate with blockchain. These properties of Parcel position it to “onboard” complex data assets onto blockchain quickly and easily. Thus Parcel is primed to solve our first challenge: “how to accurately represent “real-world” assets on chain”. Application developers of any kind can integrate Parcel into their app, using it to store nearly any type of asset on blockchain through a simple API call. Then, just as easily, mint a token to represent control and ownership of that data.
Our job then at Oasis Labs is to foster an ecosystem of Parcel-powered applications that can act as conduits for off-chain assets. Real estate companies for example could leverage Parcel to upload property deeds that convey ownership to a token holder. They could even mint many tokens for this asset, giving fractional ownership, earned rent, etc. to each token holder. Artists and content creators could mint tokens that represent their revenue and royalties, selling each token to fans as a way to kickstart their project. Game developers who want to create marketplaces and scarcity for in-game content. Parcel can enable all of this and connect these applications to Blockchains expansive set of marketplaces to allow individuals to easily trade, loan, and monetize their digital goods. Our aim is to enable all of this natively within the developer’s own application, without the need to expose their users to complexities of the blockchain ecosystem.
Protecting Digital Goods
To overcome our second challenge, “How do we ensure that ownership is preserved in a meaningful way?” let’s focus in on confidential compute. NFTs don’t have a mechanism for protecting the privacy of the assets they represent. This is fine when uniqueness isn’t important. Namely, it’s fine if someone creates copies of my digital art because only I own the original version (as determined by my NFT). What becomes problematic is when access to my asset is what I want to “own”. In other words, if sharing a digital asset devalues it (like in the case of personal, financial, or other sensitive data) then having access and privacy controls built into an NFT framework are critical for successfully increasing the utility of tokenization. Furthermore, some data is just inherently private information. A user may only want to share it with a particular entity, or sell it privately rather than in an open, public forum.
In a traditional blockchain environment, data and the application processing it are entirely public, allowing anyone to peek at their inner workings. With Parcel data can be processed in a confidential compute environment. Think of these as a proverbial black box. Encrypted data and an application go in, and only the encrypted results come out. No one can peek at the inner workings, and only the intended data owners can see the inputs and outputs. Through Parcel, data tokens can act as gate keepers of sensitive, tokenized data, only allowing the owner to see the raw information. Plus, this data can be processed and analyzed by external parties without exposing the information. This ensures that access can be granted without transferring ownership or devaluing an asset — allowing diverse market places where tokenized assets are sold, rented, loaned and shared for a broad set of use cases.
Towards an Ownership Economy
Our vision for Parcel, is to combine the ability to onboard a multitude of asset classes, keep them confidential, and easily exchange them on existing (and entirely new) marketplaces, into a simple set of APIs. The totality of these features can empower a new ownership economy where application developers, content creators, and blockchain projects can quickly mint their own tokens to reward their fans, immortalize brand moments as NFTs, and even tokenize valuable data like DNA and health records. For the first time, fans can become owners, invested in their favorite projects from the very beginning, through the decentralized economy powered by Parcel. If you’re a project just getting started, are an enterprise veteran looking to reinvigorate your users we invite to read our Parcel Data Tokenization primer and email us at firstname.lastname@example.org to start building.