High Fidelity reveal currency and IP protection roadmaps

In a pair of blog posts, Philip Rosedale of High Fidelity revealed the company’s plans to use blockchain technology as both a virtual worlds currency and for content protection.

The blockchain is described as “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions but virtually everything of value” (Don Tapscott, Blockchain Revolution: How the Technology Behind Bitcoin Is Changing Money, Business, and the World). It allows transactions to be simultaneously anonymous and secure by maintaining a tamper-proof public ledger of value. While it is most recognised for its role in driving Bitcoin, the technology is seen by more than 40 of the world’s top financial institutions as a potential means to provide speedier and more secure currency transactions. However, the technology has the potential to have far wider application.

To understand the basics of the blockchain, think of a database duplicated across the Internet, allowing any part of it to be updated by anyone at any time, and the updates being immediately available across all the duplicates of the database. Information held on a blockchain exists as a shared — and continually reconciled — database existing across multiple nodes. The decentralised blockchain network automatically checks with itself every ten minutes, reconciling every transaction, with each group of transactions checked referred to as a”block”. Within the network, nodes all operate as “administrators” of the entire network, and are encouraged to join it through what is (mistakenly) referred to as “mining”  – competing to “win” currency exchanges, sometimes for financial reward to the node’s operators (High Fidelity indicate that node operators will not gain directly from “mining” activities, but will instead be paid in HFCs for their computing resources used by the network).

Centralised, distributed and de-centralised networks – blockchains utilised decentralised networks

The key points to all this is that the blockchain is both openly transparent – the data is embedded in the network as a whole, not in any single point, and is by definition “public”. The lack of any centralisation also means it cannot be easily hacked – doing so would require huge amounts of computing power; nor is there a single point of data which can be corrupted or reliant on a single point of management for its continued existence – as High Fidelity point out, this means that the service can continue, even if High Fidelity does not. Thus, blockchain networks are considered both highly robust and very secure.

An estimated 700 Bitcoin-like crypto-currencies are already thought to be in operation, although the potential use of blockchains goes far, far beyond this (identity management, data management, record-keeping, stock broking, etc., etc.).

High Fidelity plans, over the coming months, to deploy their own blockchain network which will support both a new crypto-currency, the HFC (presumably “High Fidelity Currency”), which will ultimately operate independently of High Fidelity’s control. In addition, the system will provide a mechanism to protect intellectual property by embedding object certification affirming item ownership into the blockchain. This means that creators of original digital content. As High Fidelity explain:

Digital certificates issued by the High Fidelity marketplace (and likely other marketplaces choosing to use HFC) will serve a similar function as patents or trademarks — creators will register their works to get the initial certificates, and these certificates will be given out only for work that is not infringing on other or earlier works…. Once granted, these durable certificates cannot be revoked and can then be attached to purchases on the blockchain to prove the origin of goods. The absence of an accompanying digital certificate and blockchain entry will make digital forgery more obvious and impactful than in the real world — for example, server operators may choose not to host content without certificates and end-users may choose not to ‘see’ content according to it’s certificate status.

This approach could provide an extremely durable and trusted means of sharing digital content, one which is more durable than other approaches to digital rights management, for the same reasons as the blockchain offers security, transparency and robustness to operating a crypto-currency.

That the HFC blockchain is designed to operate independently of High Fidelity means that it can become self-sustaining, providing a currency environment that can be traded with other crypto-currencies and which can be exchanged for fiat currency through multiple exchanges.

The two blog posts – Roadmap Currency and Content Protection and Roadmap: Protecting Intellectual Property in Virtual Worlds – are very much companion pieces to be read in the order given. The first provides an overview of the HFC blockchain system and currency management, including how High Fidelity hope to establish a stable exchange rate mechanism without running into the issues of speculative dabbling in the system, inflated ICOs, etc., and on the use of digital wallets and personal security. It also outlines the certification mechanism for content protection, which the second article takes a deeper dive into, explaining how the relative strengthen of a blockchain approach as very quickly sketched out above could be used in protecting creator’s IP and controlling how their products / creations are used.

The decentralised approach to currency and digital rights management is something that has been pointed to numerous times during High Fidelity’s development, but this is the first time the plans have been more fully fleshed out and defined in writing. It’s an ambitious approach, one likely to stir debate and discussion – particularly given the current situation regarding the Decentraland / Ethereum and the risk of speculation around ICOs (again, something High Fidelity hope to avoid).

it’s also one which again points to High Fidelity’s founders looking far more towards more of an “open metaverse” approach to virtual environments and goods than others might be considering.

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