Opinion: The Superiority of Data Ownership over Asset Ownership

Disclaimer: The author’s views and opinions expressed in this article are personal and do not reflect the views and opinions of crypto.news’ editorial team.

If data is considered to be “the new oil,” then it implies that there is valuable untapped potential within all of us. In the web2 era, personal information is stored in isolated platforms and controlled by large corporations. Even worse, this data is often sold to unknown entities for their private gains.

However, in web3, users have grown tired of this misuse and abuse of their data. As a result, they are reclaiming control by linking their gaming, social media, and other accounts to the blockchain. By leveraging on-chain records and data-earning protocols, they are merging their digital identities and finally extracting value from what rightfully belongs to them.

Let us explore why, beyond owning digital assets, the true value lies in owning your own data.

The problem with data in web2

The popular business saying goes: “If the product is free, then you are the product.” This has been the modus operandi for most tech companies in the web2 era. Users are seen as both customers and resources. Companies like Facebook and Google have built advertising empires based on this new “oil” of data.

Unfortunately, time and again, user information has been leaked, lost, and traded under this system. Facebook has faced numerous scandals for its liberal sharing of user data with third parties. As a result, much of this data ends up in the hands of brokers who possess an average of 1,500 data points for every consumer. These touchpoints are then packaged and sold to the highest bidder for remarketing purposes. Big data has become big business.

This vicious cycle has persisted for over a decade, and users are understandably dissatisfied with the status quo. Three-quarters of consumers today are more concerned about their data privacy compared to a few years ago.

As digital technologies become increasingly integrated into our daily lives, from online shopping to remote work to social media, users are acutely aware of this data imbalance. With their identity and privacy at stake, younger individuals, in particular, are actively seeking a solution.

The solution to data in web3

The good news is that technology offers hope for change. The blockchain has popularized the concept of digital asset ownership among internet users. Now, innovative protocols and ambitious startups are shifting the paradigm towards data ownership. Powered by on-chain recording of off-chain information, web3 enables users to regain control and monetize the value derived from their data, just as tech giants have been doing for years.

In January, Ethereum introduced a new protocol proposal called ERC-7231, which aims to unite digital identities with an aggregated NFT. This standard binds multiple identities across web2 and web3 into a single NFT, allowing for encrypted aggregation of multi-domain identity data.

What does this mean? It means that users have a comprehensive “identity of identities” that they have complete control over. This not only enhances interoperability across platforms but also enables users to participate in the commercial value generated from their data.

Gaming serves as a prime example of this concept in action. For years, it has been nearly impossible to unite disparate gaming identities and consolidate gamer achievements and history in one place. The platforms do not communicate with each other, the data is static, and traditional game studios are slow to adapt.

ERC-7231 bridges the gap between old-world and new-world gaming by unifying identity on the blockchain. This way, gamers can freely navigate the ecosystem under one unified identity. Moreover, since they own their underlying information on the blockchain, they have sole discretion over its usage. If gamers choose to share this information, they can passively earn rewards when brands leverage their on-chain and off-chain data.

Data self-sovereignty is crucial, and several startups are actively bringing this concept to life. One such example is Clique, a decentralized identity-oracle protocol based in San Francisco. Clique enables users to verify their off-chain data on-chain and earn utility from this information. This approach ensures both value generation and privacy preservation. Furthermore, in a significant departure from web2, end-to-end privacy is guaranteed through trusted execution environments and multi-party computation. As a result, user data remains tamper-proof and is ready for continuous incentive distribution.

Sharing in the value of the internet’s new oil

A paradigm shift is currently taking place. Users are awakening to the fact that their data holds value, and they are not currently benefiting from it.

According to a survey conducted by ConsenSys, half of the respondents believe they contribute value to the internet, and two-thirds assert that they should have ownership over what they create on the internet. However, only 38% feel adequately compensated for their contributions.

Concerns about data privacy are also prevalent and growing. Over 80% of respondents from the same study prioritize data privacy, 70% believe they should share in the profits companies make from their data, and 79% desire greater control over their online identities. It is evident that change is necessary.

Web3 presents an opportunity to transform yesterday’s data dynamics into something fairer and more accessible. With the transparency and immutability provided by the blockchain, along with data-sharing protocols and platforms, digital ownership can be fixed.

I firmly believe that we are at a crossroads, and it is the users who will spearhead this transformation. In fact, the term “users” may not adequately describe this group moving forward. Instead, they should be seen as “builders” in the next wave of the internet, leveraging web3 to address the entrenched issues of identity, privacy, and monetization.

Only by redistributing data from the haves to the have-nots can everyday cybercitizens tap into the untapped reservoirs of data value within their reach.

Read more: Trust, but verify (with better data): overcoming AI’s hallucination problem | Opinion

Paul Delio is the head of business development at CARV, a platform that allows gamers to consolidate their web2 and web3 gaming activities in one place. At CARV, which serves as a modular data layer for gaming and AI, Paul is responsible for onboarding new game projects to CARV Play while also maintaining existing relationships with games, ecosystems, and other projects across web3. Prior to joining CARV, Paul held critical roles at Real Madrid and Pocketful of Quarters.

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