How to Use the Blockchain to Riff Artwork, Sell PDFs, and Otherwise Gain Economic Control of Your…

Everyone recognizes the iconic red-white-and-blue stencil portrait of Barack Obama. But it’s not as common knowledge that this famous image, already much copied and parodied, was the subject of a difficult property-rights legal battle.

The story goes like this:

In late 2007, artist Shepard Fairey created the most iconic political poster of the 21st century: a stencil portrait of Barack Obama with the word “Hope” written under it. However, it wasn’t an entirely original work: Fairey explored with Google Image Search to find a photograph of Obama shot in 2006 by freelance AP photographer Mannie Garcia and used it as the basis of his historic poster. He didn’t license the photograph and indeed might not have known how to do so. Subsequently, there was disagreement over Fairey’s rights to use the photograph, and a court case followed that eventually resulted in a confidential settlement. Fairey later pled guilty to destroying documents to try and hide the portrait’s origins.

There are many similar stories, all of which show the difficulty both of asserting ownership of digital properties and granting use of those properties to others. For example, do you really own the loot you gain in World of Warcraft? Should you have the rights to sell it in a WOW marketplace? Does the same apply to a PDF that you purchase? Could you sell it to a second-hand used PDF store when you finish reading? If you buy a piece of digital artwork, can you prove that it’s the original? Can you control your online medical records sufficiently to transfer them to a new doctor?

Registration of property rights can bring communities together. It normalizes sharing and consent practices and helps to foster opportunities for innovation and creativity.

These are all problems that we need to resolve as we enter an era where more and more of our property exists solely in the digital world. If Mannie Garcia (or the AP) had been able to record ownership of his photo in a ubiquitous digital marketplace, then Shepard Fairey would have been able to trivially contact the rights holder. He could have preemptively verified that his riff on the original fell within fair use or else acquired the rights for that usage. In situations like this, registration of property rights can bring communities together, allowing creators like Fairey and Garcia to share, exchange, transfer and license their rights as they see fit.

Similarly if there were marketplaces for your MMORPG items, your PDFs, and your digital artwork and if there were exchanges for your digital data, then you’d be able to transfer, sell, or exchange them too.

How can we create these 21st century marketplaces? Digital problems require digital solutions, and there’s one up-and-coming digital technology that offers great solutions for creating permanent records of this sort: the blockchain.

(And if you’re already familiar with the basic tenets of blockchain technology, you should skip the next two sections, and instead land at “The Bitmark Blockchain”, which explains how Bitmark’s own public blockchain, built specifically for property rights, is enabling marketplaces for digital assets and data to be accessible for everyone.)

All About the Blockchain

The blockchain is one of the most innovative computer technologies of the 21st century. It’s a decentralized ledger that allows people from all over the world to jointly record information in a permanent registry. In other words, it’s a worldwide database to which people can collaboratively write.

A blockchain is created by carefully constructed consensus algorithms where users create information and send it on to “miners”, who collect the information into “blocks” that they then add to the “chain”. Many articles have detailed the specifics of this technology, but it’s the attributes created by this technology that are particularly notable:

Any information put into a blockchain ledger is:

• ordered, it’s chronologically ordered, showing what’s first and last;
• immutable, it can’t be changed once it’s written;
• distributed, it’s stored on many different computers; and
• usually decentralized, it’s not controlled by any one person.

These particular attributes allow for a group of people (or businesses) to cooperatively manage information without needing to trust each other. They can each add their own information to the blockchain, and they can be certain that other people are adding information using the same rules and with the same understanding of the state of the overall ledger, all without any centralized authority dictating the terms and conditions for participation.

That turns out to be useful for a number of different applications.

All About Bitcoin

Bitcoin is both the origin of the blockchain technology and its most famous example. It uses a blockchain’s immutable, decentralized ledger to record transactions for the Bitcoin digital currency. This allows people to buy and sell goods and services using money that exists only as a digital asset.

Transacting digital currencies is an example of a task that benefits from the specific advantages of the blockchain. It requires transactions to be ordered so that the current owner of bitcoins is always known, it requires them to be immutable so that those transactions can never be erased, it requires them to be distributed so that the listing of transactions is eternal even if a site or company disappears, and it requires them to be decentralized so that no one person controls those records. Bitcoin holders don’t have to trust each other or any centralized authority: the blockchain technology takes care of that all for them.

But as you might guess, there’s another digital problem whose solution is congruent with the strengths of the blockchain: recording and utilizing property rights.

The Bitmark Blockchain

Bitmark considered using the Bitcoin blockchain itself to record property rights; it experimented with well-known techniques such as colored coins, which can be used to mark specific assets. However, Bitmark quickly realized that digital rights require specific features that run counter to the implementation decisions made for the Bitcoin blockchain.

“Bitmark created a new blockchain … to better support the creation and exchange of digital assets and data.”

Bitmark needed a system that forbade the joining and splitting of properties, because that was at odds with asset provenance. It needed a system that allowed unlimited coin production, because limited coins could limit property counts. It needed a system that supported metadata, because that was crucial to property descriptions. Finally, it needed a system that acknowledged the possibility of public ownership, because that gives property owners the choice to publicly declare their assets. Bitcoin was built around the ideals of fungible and finitary assets, constrained metadata, and pseudonymous identity, whereas property rights are impaired by those objectives. As a result, Bitmark created a new blockchain — one that was specifically oriented toward property rights — to better support the creation and exchange of digital assets and data.

On the Bitmark blockchain, assets are represented by three sorts of records: asset records, issue records, and transfer records. Together they record the existence of an asset, its provenance, and its current owner:

• An Asset record registers an asset. It includes a fingerprint of the asset and the public key of a registrant.
• An Issue record creates a specific instance of an asset. An asset record might link to just one issue record (if it’s unique) or to multiple issue records (if they’re part of a limited edition). An issue record includes the owner’s public key and is signed by the registrant’s private key. The result is a “bitmark”: digital proof of ownership of a property.
• A Transfer record moves a specific instance of an asset from one owner to another. These are the heart of the Bitmark blockchain, because a string of transfers can be used to track an object’s provenance all the way back to its origin. Each record notes the public key of the new owner and is signed by the private key of the old owner.

As with any blockchain, there’s a bit more complexity in the logistics of Bitmark. There are minor transaction fees, which are paid with proof of work for issue records and with transactions on cryptocurrency blockchains for transfer records. There are specific rules for how recorders (miners) are compensated for their work, either in cryptocurrency payments or in bitmarks. Bitmark’s technology page details more of these specifics.

However, Bitmark’s fundamental use of blockchain technology to prove ownership and to support the transfer of digital properties is quite simple. And, simplicity offers power.

To return to our initial historic example, imagine a world where Mannie Garcia (or the AP) bitmarked that 2006 photograph of Barrack Obama. If they’d made their bitmark public, Stephen Fairey could have contacted them about usage, and if they’d offered the photo in a digital marketplace, Fairey could have chosen to license it. None of this is a digital pipedream: KKBOX already uses the Bitmark blockchain to transparently record ownership of music, ensuring that the artists get paid their royalties promptly. It’s the first major use of Bitmark to empower both original creators and those who want to riff or reuse their work.

The Bitmark blockchain is quickly becoming the heart of a digital economy, with individual marketplaces already available for music rights, hardware warranties, artwork, and health data. Using these various marketplaces, digital citizens can not just prove ownership of their digital properties, but also license and exchange them. This is all linked to real-world contract law: music rights maintain industry standards for paying artists, health data has HIPPA-compliant portability and transfer channels, while the registration and transfer of other properties reflect current copyright and licensing laws.

Our lives and our property increasingly exist in the digital world. The Bitmark blockchain helps us to better control this new frontier.