With all the recent Crypto Currency hype with BitCoin, Ethereum, Monero, etc, it got me thinking about the value of different assets in society and what ownership really means.


What is the distinguishing factor that allows 1 person to own something and another person not to own it? One person can claim something is his, but if someone else claims they own it as well, who is right? In our society, assets of significant value like Real Estate have a document that is filed with the government that states that X person owns this piece of land and the improvements upon it. The entire position of ownership is based upon the fact the government, with all its legal force, will allow you to own the property and all rights that go with it. If the government was not present, someone could come in with some weapons and claim the property as their own if the landowner is unwilling to put up a fight.

The entire value of the property in this case comes from the fact that the government will enforce property ownership rights. This comes with its own set of problems. The government does not do this for free. They expect the land owner to pay a fee (taxes) to the government for this right as well as many other services that may not be of interest to the landowner. This can cause the property’s value to fluctuate significantly if there are changes in government policy. Let’s imagine that the local government decides to raise taxes from 1% of the property’s value to 5%, this will very likely cause property values to drop significantly.

If you go on and begin look at other types of assets such as physical currency, bonds, business equity, these assets also tend to have their ownership rights and value based on enforcement by the government.  As another downside, these assets can be seized if the government finds out you are doing something they don’t like.

Cryptocurrency Advantage

Crypto Currency’s unique advantage, when it comes to ownership, is linked to the fact that ownership of the currency is not connected to the government.  A person can own crypto currency by having a file on their computer and the password. This means that the owner of the currency can be tied only to the password. This asset can’t be seized by the government unless they are able to extract the password out of its owner. This is probably the closest thing to true ownership today. Plus, if the wallet file is encrypted, there is no reason that the government would even know that you contain a wallet on your computer.