In the economic world, just about everything can be classified as “rival” or products that can only be consumed by one individual at a time. Food, cars, beauty products, fuel – almost all private goods. When economists try to give sweeping examples of goods that don’t fall in this category and are instead “nonrival”, there are very few, with the internet and public parks being some of the most highlighted. But we can add another to the list: personal data. Data is not depleted and can potentially be used multiple times, across geographies, and at scale; in fact, it can be used almost infinitely. Stanford economics professors Christopher Tonetti and Charles I Jones wrote about this in their recent paper, “Nonrivalry and the Economics of Data.” Fortunately, with the rise of legislation such as GDPR where data ownership and sharing under clear and informed consent exist, individuals have an opportunity to benefit from this data where they choose to participate.
Often referred to as the “new oil”, data is much more valuable because of its ability to be reused. How? Currently, data isn’t part of a closed system. As data is utilized, an individual’s ability of maintaining ownership or monetization as it travels is a challenge. In today’s model, data is primarily controlled by large corporations that want to hoard and sell it for their own benefit. This removes consumers – from whom the data came in the first place – from the equation, as they have no clear picture of how and when their data is used. They are often not compensated, and have to (gasp) trust the companies to keep their information secure and private. These are some of the reasons why legislation, such as GDPR, is seeking to provide consumers (the providers of data) with greater control of their data, and ask users to observe greater obligation in respect of data.
Companies are using this information, ostensibly, to improve outcomes. Data-driven business decisions should result in the products and services that consumers want and need in the first place, right? Because the data is showing these wants and needs. But when you weigh this possible positive outcome against the negatives, the discrepancy starts to become clear.
In fact, this very issue came to the forefront recently when Facebook’s data collection practices came under scrutiny. This issue became more and more complicated the further the investigation progressed, but at the surface was a question of: who owns their own data? Facebook’s massive amounts of data collection, both through the platform and associated apps, were personalizing online experience and benefitting advertisers, but “Facebook has continually dragged its feet on letting users exercise any control.” This is just one highly publicized example. So at the time of writing, it’s highly encouraging to see Mark Zuckerberg post his vision for data and privacy, “ A Privacy-Focused Vision for Social Networking.”
Why is this a problem?
Because of its nonrival status, data could – and, we argue, should – be used by many, not just the one corporation that “owns” it. When hoarded, society is made poorer, and so is the consumer whose data is being used. If consumers can retain ownership and control of their data, they can decide when, where and who uses it – all while being properly compensated, and protecting their own privacy. Overall, this will greatly increase the rate of sharing, making data truly nonrival.
Obviously, consumer data is valuable to corporations. From Facebook’s “data consuming monster” to companies conducting panel-based market research to advise product development, this model is vital to success. When consumers take control of their own data, there will be multiple buyers who want that piece of data, and each would pay for it if they knew it existed. This consumer ownership, with the market deciding the price as well as the owner deciding whether or not to sell, is a recognizable economic model.
But how does one retain ownership or monetization of data as it is sold and transacted between either individuals and/or corporations? The answer may actually be a relatively simple one. We need a tamper-proof database that:
- Allows anyone to see and review it publicly
- Includes all records of ownership
- Includes proof of approved transactions on any rights and distribution of any data
- Preserves privacy
If this sounds appealing, it in fact is exactly what blockchain provides us with – an immutable, encrypted, public ledger that builds integrity into how we transact with data. A good definition of blockchain is:
“…a time-stamped (i.e. has the time/date recorded within it) series (blocks) of data that cannot be changed/amended over time. This data is managed by several computers and therefore not owned by a single entity. Each of these series of data (i.e. block) are secured and bound to each other using cryptographic principles (i.e. chain), which helps ensure integrity and linkages between each block. Cryptography is a collection of techniques that ensure secure communication and, at a basic level, it involves constructing and analyzing protocols that prevent third parties or the public from reading private messages or accessing private data.”
Blockchain technology and advanced cryptographic techniques now provide us with new opportunities to address the challenges outlined above when it comes to personal data. While a user’s personal data should never be stored on a public blockchain directly, these technologies provide an opportunity to provide an immutable record of utilization, consent and denial. To put this in perspective, think about the music recording and distribution industry. This space was forever changed with the advent of digital music sharing, coupled with a lack of ownership and accountability. These same kinds of ramifications are affecting the market research space, and blockchain provides one answer to these ownership challenges.
In short, blockchain offers the transparent and immutable accounting backbone for recording ownership for every data transaction. The founding Internet protocols were built around the display and sharing of data, but fell short of providing attribution, ownership, and transactional support for data and content. As these new protocols (using blockchain) are established and adopted, consumers can gain confidence in providing consent to their data, how their data is being used, and be compensated for it; and corporations, governments and non-profits can be reassured with responsible data acquisition, quality, and usage.
The bottom line? When everyone has access to data, everyone wins, and all can make intelligent decisions.
