Proof of Ownership Technology

This article is an explanation of how blockchain technology relates to ownership of primarily physical things not cryptocurrency. The ownership of cryptocurrency is now well understood. A brief explanation can be found below. The less documented is how blockchain technology can be applied to ownership records of physical things such as houses, cars, boats, songs, artwork, laptops and other assets. This is the kind of ownership we are referring to.

Ownership usually involves 3 parts, an owner, a target, and a set of rights. The target can usually be anything identified by a noun such as a car, location, or a concept. The rights typically involve the ability to control, occupy, or sell more rights. The entity claiming to be the owner will use history, violence, and various methods of evidence to support their claim. Often times the evidence used to support claims of ownership are corrupt. Often times records disagree and sometimes more than one entity claims to be the owner or have rights.

The previous generation of ownership technologies include:
Possession
A county clerk's office
A government patent office
The Department of Motor Vehicles
A paper receipt or bill of sale

Blockchain Ownership Records

Blockchain ownership records are a new kind of record. These records are shared among many parties and the integrity of these records is strictly enforced. Through mathematical proofs we can quickly ensure that the record we are seeing is the same record that people around the world can see. If someone were to add a phony record to the blockchain the mathematical proof would fail and it will quickly discern it is a fake record.

Through modern cryptography we can ensure that records are only modified by users who have explicit rights to modify those records. The rights to modify a record are granted by holding access to a private key number. As long as a party is able to keep their key number secret they are the only party who can edit or update the record associated with that key. The current encryption technique is unbreakable by any modern technique in any reasonable amount of time. This proves indisputably who the owner of a record is.

The first version of this proof of ownership network is bitcoin. With bitcoin a record contains an amount of 'bitcoin’. The owner may transfer the the rights of those bitcoin to another owner by using their private key. This system has been an unprecedented success for over 10 years. Although the bitcoin themselves have no intrinsic value, the ability to transfer something in an indisputable way has created value.

The record in the bitcoin network is used to record a quantity. However, blockchain technology can be used to notarize any information in a record. By giving an ID to objects in the real world and then adding that ID to records in a blockchain we can begin an ownership history of an object in the physical world. The object itself is not linked by any physical properties to the blockchain, but for purposes of record keeping and accounting we gain several advantages:

Transparency: Anyone with access to the network will have the same data. Unencrypted data will be clearly visible to all viewers. False data is easily detectable by viewer tools. A shared history also allows us to trace how they have been updated over time and who has updated them.

Mathematically Enforced Rights: Rights to update or change the ownership record can be guaranteed by an unbreakable method.

Efficient transfer at a distance: Rights can be transferred globally or across even greater distances to facilitate the smooth flow of business.

Programmable updates: Software can be used to update records based on time or other conditional variables. This feature of blockchains is only beginning to be explored.

Contacting owners: If object owners are recorded then we can find and contact the owners of those things. Owners are usually identified by ID numbers that can be generated at will. The owner does not need to reveal their name unless they wish to.

Anti-forgery: If authorities create a product then users would expect their ownership history to start with those authorities as the origin. The ownership records are more difficult to fake than the actual product.

With this new method of recording ownership it would be impossible for 2 conflicting entities to be listed as the current owner of an object. Everyone is forced to accept the same record as fake records are rejected by the network.

As long as the current owner can maintain the secrecy of their private key they never have to worry about losing rights to transfer owner of that record. An individual can hold owner rights in the face of overwhelming physical force or legal force.

There is still an unsolved problem of the link between the physical object and the blockchain. The object may still be stolen or counterfeit. In the case of theft we have a record of who the rightful owner is. In the case of counterfeit goods the thief will need ownership rights of an original version of their forgery in order to pass it off as real.

Recording unique qualities of an object is a useful method in linking ownership records to blockchain records. A serial number or the mathematical hash of an image of that object are good unique identifiers. The main purpose of these identifiers would be to help keep objects with the correct owner rather than preventing forgery.

The primary method in preventing forgery would be to use a limited amount of records produced by the original authority. If 100 unique handbag records are made then a forger would need the record of handbag 65 in order to sell their forgery as handbag 65. Even if their bag was an exact copy a customer could check to see if the forger was the current owner of that handbag. If the forger owned the actual ownership record they would be able to sell the forgery and keep the original, but they would no longer have the original ownership record, which would render the original less valuable. An informed customer would always want the original ownership record to be assigned to them.

Location tracking can be used to link digital records to physical objects. An object can only be in one place at the same time and its movement through the world should be linear. If an object hops in an impossible amount of time or distance it could not be considered the same object. This property would not apply to digital goods.

After we design, implement and accept the blockchain proof of ownership the next step is to have it be legally binding. The law needs to recognize the ownership of an asset by using the blockchain records. Then the government can start adopting blockchain technologies to record ownership. We will see the county clerk, the department of motor vehicles, the secretary of state and other departments adopting the blockchain model. This will save the government money and reduce legal costs in ownership disputes. New markets can form using these blockchain models making it easier for us to buy and sell assets.

Conclusion

Recording the ownership of individual objects on a blockchain offers some improvements over the traditional ledger technology. In most cases there is no written record at all and possession is solely used as proof. In these cases blockchain technology offers generous advantages. There are great advantages for cases where there are records but they use old centralized and often paper technology.

All problems will not be solved with blockchain technology. Theft and counterfeits will continue to exist, but blockchain does offer new tools to help combat these problems. In addition blockchain provides new features like programmable ownership that could be used to dispense usage rights or contact owners pseudo anonymously.

If you would like to try this all of this for yourself head over to ReceiptChain.io and try the first blockchain ownership network. You can create your own unique identifiers for objects and start the chain of ownership. If you are an artist you can start creating ownership records for your work so you can contact your owners or trace it back to you. If you are designer or small business you can put your entire store inventory that can be labeled with easy-to-scan QR codes. Our app is available for iOS and Android.