Virtual Value: The economy is driven by the ownership of intangible assets.

Source: Cointelegraph Original text: "The Value of the Virtual: The Economy Driven by Ownership of Intangible Assets"

The opinion comes from Yat Siu, Executive Chairman and Co-Founder of Animoca Brands.

Discussion on digital property rights, copyright, intellectual property, open metaverse, artificial intelligence, and intangible value.

Whenever I attend a meeting or similar public event, there is always someone who comes over to ask me how cryptocurrencies (whether fungible or non-fungible) can hold value in a virtual realm that does not exist in the physical world. This question is surprisingly common, especially in one-on-one interactions.

Virtual objects such as non-fungible tokens (NFTs) and cryptocurrencies are both digital and intangible; their existence is not based on the real (physical) world, and unlike digital currencies, they typically do not have the endorsement of real-world institutions.

For the open metaverse - characterized by true digital ownership - the ability to hold value (especially monetary value) is crucial (see "What is the Open Metaverse?").

I recently delved into the value of virtual assets during an interview with CNBC, which may be very helpful for some readers. I would like to discuss this topic in more detail and add some historical context.

When discussing whether things that do not exist in the real world can have true monetary value, it is important to remember that intangible things have carried value for centuries; the key lies in ownership and the benefits associated with ownership.

One of the most important cornerstones of modern industry and innovative economies can be traced back over three hundred years to England, with the lengthy title "An Act for Encouraging Learning, by Vesting the Copies of Printed Books in the Authors or Purchasers of Such Copies, during the Times therein mentioned."

This legislation is also known as the "Anne Act" or the "Copyright Act of 1709 (or 1710)," which laid the foundation for modern copyright and intellectual property law by establishing the authors of specific works rather than publishers as their legal owners.

The bill marks a pivotal moment in history, distinguishing creators (artists, writers, musicians, etc.) from the platforms that distribute their works (Netflix, Medium, Spotify, etc.) in a manner similar to how we differentiate them today.

By granting creators exclusive rights to their works for a limited time, the Copyright Act and subsequent legislation established an economic framework for intellectual property, allowing creators to retain control and economic benefits from their works. At the same time, society gains access to these works through public libraries, book sales, and similar distribution methods.

The result was a true explosion of literature, science, and philosophy, which propelled the European Enlightenment and the Scientific Revolution.

This period of history saw the rise of literary giants such as Jane Austen, Victor Hugo, and Charles Dickens, as well as the emergence of thought giants such as Voltaire, Rousseau, Kant, Hume, Mary Wollstonecraft, and Adam Smith. In the field of science, the public work of visionaries like Charles Darwin, Gregor Mendel, and Marie Curie has revolutionized our understanding of the physical world.

The ability to have one's own ideas brings fame and economic independence to innovators, enabling them to challenge norms, push boundaries, and disseminate groundbreaking thoughts. Copyright provides economic incentives for creating and sharing works based on ideas, ensuring that these contributions can endure and inspire future generations.

The influence of copyright is so powerful that other countries have followed suit, including the Copyright Act enacted in the United States in 1790.

Copyright and other forms of intellectual property protection have been accelerating innovation and driving economic development for more than three centuries. One of the most notable examples is China.

China was once a free paradise for intellectual property infringement. Pirated digital and physical goods were prevalent until the 1990s and early 2000s when China began to strengthen intellectual property protection. This has led to rapid growth in domestic innovation, and today, China has become a world leader in creative generation in forms such as scientific research, patents, technology, and content.

The reforms in China regarding intellectual property protection in the 1990s and early 2000s led to a surge in the number of annual patent applications, which is considered an indicator of innovation (Image source: Our World in Data).

Today, intellectual property is widely recognized as being subject to ownership protection just like tangible things, even though it is intangible and time-limited. We recognize that copyright, trademarks, patents, and similar measures establish and protect the ownership of intangible assets.

In a previous article of mine, I mentioned the work of philosopher John Locke, describing him as "one of the OGs of the domain of ownership and an important inspiration for the European Enlightenment and the American Constitution."

In short, Locke believed that a person has natural rights to own the fruits of their "body" and "hands" labor. Copyright applies this Lockean perspective to intangible products of thought.

As I pointed out in that article, Locke's reasoning—that a person's labor produces property—provides a solid foundation for "the ownership of intangible assets, including intellectual property, time of use, data, and its derivatives."

Intellectual property is essentially intangible: scientific breakthroughs, literary works, musical creations, and various other products of thought "appear out of thin air" and do not have a fixed physical form.

In a capitalist economy, intellectual property protection plays a key role in supporting and motivating creators, allowing the fruits of our ideas to achieve commercial success, spread, and endure. Without intellectual property protection, entire industries, including technology, science, and medicine, would be severely hindered due to a lack of economic incentives, making research and development impossible.

It is no exaggeration to say that the passage of the "Annie Act" has changed the world by establishing a framework for creators to own and protect their intellectual achievements, thereby enhancing and sustaining innovation.

The introduction of intellectual property protection has laid the foundation for the ownership of intangible assets. It allows our thoughts to create intangible capital assets, thereby driving the economic engine of wealth creation. Equally important, copyright clearly grants rights to creators, helping to decentralize power from large publishers.

The ownership of intangible assets has obvious tremendous value for us at Animoca Brands, to the extent that we will promote digital property rights as our core mission.

In traditional business and finance, the value of intangible assets has been widely recognized. Brand value, intellectual property, and goodwill are all considered valuable. The massive intangible data generated by your online activities every day is of great importance to companies and platforms, which use (and sometimes abuse) this data to extract value from you.

Consider the fact that intangible assets have already dominated the global economy:

(On the relevant topic, the enormous economic power of intellectual property makes the recent proposal by Jack Dorsey and Elon Musk to "delete all intellectual property laws" seem even stranger. It doesn't seem like the wisest course of action to abolish a mechanism that has successfully driven innovation, investment, and development for over 300 years. I discussed this in a post on X.)

Blockchain technology is a game changer because it can provide provable ownership, scarcity, and economic opportunities for intangible assets in a decentralized manner, at minimal cost, quickly and securely.

In a non-blockchain framework, the public record of asset ownership is maintained by a trusted central authority (usually a government agency). This brings significant challenges, including security, access barriers, inefficiency, high costs for owners, red tape, and poor cost-effectiveness in protecting relatively low-value items.

However, within the framework of blockchain, decentralized and immutable ledgers can greatly reduce waste, vulnerabilities, and missed opportunities, while providing and automating important record-keeping functions more efficiently and securely than centralized systems. But that's not all.

Value creation based on intellectual property is particularly crucial in the context of the ongoing artificial intelligence revolution.

Recently, a viral trend of AI-generated images mimicking the style of Hayao Miyazaki (the legendary founder of Studio Ghibli) has drawn attention to intellectual property protection. This trend has brought to the forefront concerns about using protected intellectual property to train AI and the potential impact of easily generated imitations on legitimate intellectual property owners.

The film industry has been working for years to solve this problem:

"The main AI companies in the United States, OpenAI and Google, submitted a letter to the Office of Science and Technology Policy this month regarding an AI action plan, arguing that allowing AI developers to use copyrighted materials to train AI would be beneficial...

"SAG-AFTRA, the union representing around 160,000 performers, is calling for film and television producers to obtain actors' consent when creating and using digital replicas of them. They are also advocating for actors to be compensated at the usual rates even when their digital replicas are performing roles."

——CBS News, March 17, 2025

These tricky issues will inevitably affect most industries. Will society be able to successfully legislate to protect our intellectual achievements from the efficient imitation by artificial intelligence? Will AI regulation enhance the industry, or will it merely restrict innovation and competitiveness?

There are technological solutions to some concerns regarding AI and copyright. Blockchain provides a secure and trustworthy framework for the large-scale tracking, sourcing, ownership, and various other aspects of intellectual property currently challenged by generative AI.

What's more, blockchain can also facilitate the tracking of usage and payment of royalties related to the ownership of individual assets, even for assets of very low value.

In the near future, in a world driven by AI, blockchain technology could serve as the foundation for an efficient mechanism that provides fair rewards and certification for creators, whose intellectual property powers AI (a topic I briefly discussed in my TED talk).

When someone asks me how NFTs or cryptocurrencies can have real value in an intangible way, I usually respond by asking them questions about their favorite musicians, writers, or filmmakers' works. Most people have a basic appreciation for intellectual property in "traditional" industries, as these industries have considerable experience in managing ownership of intangible assets.

Intellectual property is considered to have real value even without physicality, and creators hold ownership of their intangible creations, granting them the ability to "create capital out of thin air" through the fruits of their thoughts. This also applies to virtual objects (in fact, virtual objects often represent or are associated with intellectual property).

Whether you have an idea, something you've written, a cryptocurrency, or an NFT, the key lies in ownership and its associated benefits. Owning something (whether virtual or real) provides a certain degree of opportunity, which would not be possible without such ownership.

As the world embraces the digital frontier, Animoca Brands' mission is more relevant to me than ever: to provide digital property rights for everyone, thereby helping to ensure that all creators receive fair compensation not only for their creations but also for their relative contributions to the works of others (such as AI, social networks, advertisers, remixers, etc.).

Help promote the principles of intangible asset ownership during the Enlightenment, Scientific Revolution, and Information Age, which can now be extended to our digital lives in the decentralized open metaverse, where the technological framework has established provable ownership of virtual assets, making the creation and access to virtual assets inherently democratic and easily accessible for all participants.

More than 315 years after the passage of the Anne Act paved the way to an open metaverse, the intersection of technology and property rights is now poised to unlock unimaginable creativity, economic empowerment, and progress for billions of people.

The viewpoint comes from Yat Siu, Executive Chairman and Co-founder of Animoca Brands.

This article is for general informational purposes only and should not be considered or construed as legal or investment advice. The views, thoughts, and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.