Reclaiming Property Rights

We define property rights and examine how Bitcoin paves the way for the next stage in human evolution: Towards H. sapiens bitcoinensis.

Prateek Goorha

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In the beginning: Property rights by social consensus

1. Where property rights come from

To understand what the intrinsic value of any good really is — be it a bitcoin or a bar of gold; a painting or its NFT; a carrot or a car — one must first take a step back and truly grok property rights.

The widely-held belief is this: It is the role of the government to provide, protect and enforce an individual’s rights over her property, so that markets may develop and flourish without the debilitating fear of confiscation and appropriation thwarting their very existence.

This traditional view insists that property rights are only ‘real’ when they are formally assigned and must, therefore, be provided to us exogenously, by a benevolent third party. The assignation of rights resulting from a market transaction must either be implicitly sanctioned or explicitly effected, in a top-down manner, by the complex of formal institutions we refer to as government. We may cavil at the costs that this third party levies, but, nonetheless, we place our trust in it for vast swaths of our lives, from the safety of our drinking water to the protection of our most cherished intellectual creations.

There is a voluminous literature that establishes — theoretically and empirically — that those governments that have done their job of curating property rights well have enabled flourishing economies, while those that failed in their responsibility were witness to languishing economies.

And so, in the traditionalist’s view, the role of government in property rights is deemed so obvious that, should you question the legitimacy of its premise, you are tagged as being anything from a misguided iconoclast to a dangerous anarchic.

Fig. 1: Variability in Regulatory Quality (World Bank)

Yet, as Figure 1 above illustrates, regulatory quality varies markedly around the world and, as Figure 2 below depicts, the quantity burden of regulation imposed by governments is…

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Prateek Goorha

Economist. Author. A flaneur who loves Bitcoin, coffee and cricket.