At the core of bitcoins and all other newly-minted cryptocurrency coins is the Blockchain. Many people think that the two are the same, but they are not. Blockchain technology is a distributed, but shared ledger, more accurately, a database, that allows you and me to record and keep track of an item, or transaction.
We tend to think that this recording and tracking process is for only digital objects, but that, too, is limiting this powerful new technology. Companies are creating these databases to track all kinds of physical objects, too – from diamonds to art to photographs.
Blockchain is not governed by one single user and herein lies some of its greatest strength. There is no centralized version of this shared database. Instead, it is nearly-completely accessible to the public and even private companies. That transparency means that all users can see the activity for every piece of information in the shared database. Once something is in the database, it is immutable. It cannot be changed or removed.
Let’s explore any intellectual property (IP) that pays a royalty to the creator of it –artists, musicians, authors, and photographers are just a few examples. In addition, IP comes in many different forms and the licenses or royalties can be earned from territorial/geographic licenses, time-based licenses, to usage types.
Many creators sell their works through distribution networks, or resellers, and there is a lot of mistrust and inefficiencies in those systems. There are redundant costs based on financial institution processes – exchanging various international currencies is but one expense that goes away when you have a digital currency or token. It isn’t easy to see what’s been sold, when, or by whom, but Blockchain technology offers to solve some of these challenges.
Creating a catalog or registry of all of these creations, to date, has been difficult and expensive – look at the world of trademarks, for instance, where registration is a long and expensive process. But it is recorded, in most places of the world and you can search for answers in those registries. Copyright exists for creators, but it is not yet, not fully, a searchable database. Blockchain changes that.
To continue with this example, creators can register their works to a Blockchain to provide a tamper-proof method of proving ownership (again, the immutable, unchangeable nature of the Blockchain keeps it from being lost or tampered with). Ownership used to be hard to prove, but Blockchain would fix that, and more – as creators would know who is using their work, who is seeking a license to their work, or using it illegitimately.
Currently, there are a number of companies building Blockchain-based platforms, closed-systems, for music, authors, and other creator types. Take a look at music cryptocurrency, AudioCoin started by British blockchain startup: Blockpool. Or, the digital artist-focused system called Ascribe.
Overall, these cryptocurrency platforms will make it cheaper to move and sell intellectual property – because all the costs from complicated and expensive royalty systems will cease to exist. We will have one very simple and transparent royalty accounting system, documented in the blockchain. And the IP holders, the creators, will receive more money from their creative works as we build a real and lasting economic model that helps protect their works.