How blockchain technology is revolutionizing digital ownership?

What is digital ownership?

“Digital ownership” describes the legal rights and authority a person or organization has over a digital asset or property.

Ownership is usually linked to material goods such as real estate, construction projects and cars. However, ownership of digital assets has become more significant as the Internet and the digital economy have grown.

Under existing rules and regulations, digital ownership includes the freedom to use, give away, sell or modify the digital asset as the owner sees fit. Blockchain technology opens up new opportunities for secure and decentralized digital ownership due to the increasing digitization of many assets, such as art, music, video games and financial instruments.

Blockchain technology allows people to own and control their digital assets without intermediaries such as banks or government organizations. Democratization of ownership can open new avenues for value production and trade in the digital economy.

How does digital ownership work?

In order for people and organizations to be able to own and manage their digital assets in a decentralized and secure way, digital ownership uses digital tools and technology to produce a safe and transparent overview of the ownership and transfer of digital assets.

Digital technologies such as blockchain, smart contracts and digital signatures generate and manage a record of digital assets and when they are transferred. Blockchain technology is beneficial to digital ownership because it provides a secure and decentralized ledger of transactions that can be used to record the ownership and transfer of Web3 digital assets. Each transaction validated and stored on the blockchain provides a transparent and impenetrable record of ownership.

Another technology that can be used for digital ownership is smart contracts, which autonomously enforce the terms of an agreement between two parties. These contracts can be used to control who owns which digital assets and how they are transferred, offering a secure and open method of asset exchange without the need for intermediaries.

Digital signatures can also prove ownership of assets. A digital signature is a mathematical method of confirming the legitimacy of a digital message or document. This can be used to demonstrate proof of control and ownership of digital assets.

How does blockchain make shared ownership of assets a reality?

Blockchain technology enables shared ownership of assets due to its secure and transparent method of dividing ownership of digital property or other assets into smaller parts.

Traditionally, only people with sufficient funds to purchase the entire asset have the means to hold assets such as real estate or art. This has made it difficult for many people who may not have the money to buy an asset outright but want to own a share. So how does blockchain secure ownership of digital assets?

Assets can be divided into digital tokens using blockchain technology, with each token denoting a specific portion of the asset. In blockchain-based systems, these tokens can be bought and traded, enabling shared ownership of the underlying asset.

For shared ownership, blockchain technology offers several advantages, including:

• Transparency: Blockchain technology allows users to track who owns specific tokens by providing an immutable and transparent record of ownership.
• Security: Blockchain technology offers a secure method of transferring ownership of assets, ensuring that transactions are immutable and untouchable.
• Liquidity: More liquidity is enabled by shared ownership via blockchain technology, which enables simplified buying and selling of tokens representing the asset.
• Accessibility: Blockchain technology allows people to invest in assets that were previously out of their price range or subject to other restrictions.

How do NFTs prove ownership?

Nonfungible tokens (NFTs) prove ownership by creating a unique digital certificate for a specific asset.

A decentralized digital ledger that keeps track of all non-fungible token transactions and ownership changes is used to create each NFT. When generated, an NFT has a unique digital signature, indicating the ownership of the asset it represents.

This signature is registered on the blockchain with all information about the asset and the transaction. Since the blockchain is decentralized and offers immutability, it provides a secure and transparent record of ownership that cannot be changed or deleted.

Once an NFT is minted, it can be transferred from one owner to another through a secure and transparent mechanism. Similar to changing the ownership of tangible assets, this procedure is digitally recorded on the blockchain.

Related: Non-fungible tokens: How to get started using NFTs

Each NFT is distinct and has a distinctive digital signature, which makes it possible to establish ownership of a specific item. For example, if a creator creates an NFT for a digital artwork they have produced, the non-fungible token can be used to demonstrate that the creator of the NFT is the rightful owner of the artwork.

What is the future of digital ownership?

The future of digital ownership is likely to be influenced by many factors, including technological advances, changing consumer behavior and regulatory frameworks.

New ownership models and asset classes are likely to emerge due to the continuous development of blockchain technology. As NFTs become popular, they can eventually be used for various digital assets, including video games, virtual homes, and music.

Users can also easily transfer ownership of digital assets between different platforms and ecosystems thanks to interoperability standards for digital assets and ownership systems. This can help to create a more unified digital ownership landscape.

The number of digital asset marketplaces is likely to increase as more people start owning digital assets. These marketplaces will allow anyone to exchange, buy and sell digital assets in a safe and open environment.

Related: A beginner’s guide to the legal risks and issues surrounding NFTs

Regulatory control will probably increase with the increased use of digital assets. Governments and regulatory organizations can create digital ownership frameworks that help with consumer protection and clearly define ownership rights.