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The Fraud of Intellectual Property

Copyright. Patent. Trademark. None of these concepts apply comfortably to Bitcoin which was forged in open source and plunked into the public domain to function as a collaborative venture. Intellectual property (IP) itself seems antiquated in the Internet Age with gluts of free data just a Bittorrent away. But IP is an active issue within the crypto-community, especially regarding customized blockchains in which there is tremendous potential for profit.

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The trend toward IP will accelerate as the blockchain and digital currencies go mainstream. In fact, blockchain tech is already being used to register digital copyrights in a way that is both immutable and timestamped. It is called “the poor man’s copyright” because registration is often free. And it cements together the concepts of Bitcoin and IP.

But can someone actually own an idea? This is not asked as a legal question but as a practical one. The law can grant artificial property rights in anything to anyone, including the ‘ownership’ of another person. Such a law does not make slavery proper or logical, however.

IP is a contradiction in terms and an artificial construct that blocks human progress. IP would obstruct the development of Bitcoin and similar technology while sharply diminishing its value to individual freedom.

What is Property?

Who Owns What Is In Your Mind? The title of this book captures a commonsense objection to IP. Most people would indignantly declare, “no one owns what’s in my mind!” And, as long as information is private, then it is ‘owned’ as part of the natural jurisdiction everyone has over his body. You own undisclosed ideas in the same manner as you own air in your lungs…that is, for as long as the air is in your lungs. Taking your ideas without consent would require violence, perhaps in the form of torture.

But what happens when the idea ceases to exist only in your brain? If a scientist leaves a chemical formula scrawled on a blackboard that you accidentally glimpse, do you have a right to use it without the originator’s permission? To do so might be immoral and it certainly is in bad taste but is it a violation of property rights? Those who argue for IP, on any basis other than contractual, are claiming the law should protect ideas as it protects other property.

The IP debate devolves to the question, “What is property?” IP advocates generally define it as tangible or intangible ‘goods’ that have been acquired through discovery, labor, trade or as a gift. IP deniers often ask a more fundamental question: “Why does the concept of property exist in the first place?”

Concepts are problem-solving devices that arise only when people are confronted by a need or a desire. The concept of ‘property rights’ arose as a means to solve conflicts caused by scarcity. All tangible goods are scarce, which results in a competition for their use. Since the same apple cannot be used at the same time and in the same manner by two people, it is necessary to determine who should have the apple. If you lived in a world where thinking of an apple made it drop into your hand, there would be no scarcity and no need for the concept of property.

But ideas can be used at the same time and in the same manner by an infinite number of people. They are not scarce except when a scarcity is artificially enforced, usually by law. In short, IP contradicts the very purpose of property.

IP also lacks several of the defining characteristics of property. For example, ideas are not transferrable; that is, they cannot be alienated. Thomas Jefferson famously stated, “He who receives an idea from me, receives instruction himself without lessening mine; as he who lights his taper at mine, receives light without darkening me.”

The inalienablity of ideas is a result of the nature of ideas. They are not wooden, metal or anything else physical in the external world. Ideas can be expressed in physical form, certainly; the principle of electricity can be expressed by a generator. If so, the person who discovered the principle and built the generator owns the machine but not the principle which others remain free to understand and use themselves.

Ideas in your mind are an aspect of who you are whether or not you originated them. For one thing, every idea you experience becomes immediately different because it is automatically integrated with other thoughts, memories and associations that are uniquely you. For someone to claim ownership of them, therefore, is to claim a property right to your body. It is a form of partial slavery.

Ideas in circulation are not property at all. Perhaps a ‘property’ right could result from a contract but this would almost certainly break down, and quickly so. For one thing, how would a third party who glimpsed the idea be obligated not to use it?

Copyright v. Patent

Copyright and patent are often treated differently, and for one reason.

Simultaneous and independent inventions are not uncommon because many discoveries are almost logical extensions of ‘the state of the art’ in science or technology. A commonly cited example is the independent formulation of calculus by Isaac Newton and Gottfried Wilhelm Leibniz. Advocates of IP dismiss the idea that two men could independently originate Hamlet, however. Other writers might use the themes of Hamlet, perhaps, but they had no business using the words of the play for their own benefit.

A complex argument would require much more space than a 1000-word article. (Click here for a more detailed presentation.) It may be sufficient to reduce the pro-IP position to a logical absurdity. Namely, if a form of expression or arrangement can be property, then why limit the ownership to words? If a printer cannot publish an ‘unauthorized’ Hamlet, why should a shoemaker imitate a competitor’s new shoe style or a garden plant an arrangement of flowers that he has seen? How can a cook duplicate a recipe without the originator’s permission? In short, why doesn’t every person own every form of expression that they create? There is nothing legally sacrosanct about words or code.

And, yet, such a move would be absurd because it would place society in a straitjacket.


Advocates of IP inevitably argue that IP is necessary to promote invention and innovation which won’t occur if people don’t own the products of their labor. (Bitcoin itself refutes this argument, of course.) The reality is the opposite of what is being claimed. The 19th century individualist anarchist Benjamin R. Tucker explained, “The central injustice of … [IP law] is that it compels the race to pay an individual through a long term of years a monopoly price for knowledge that he has discovered today although some other man … in many cases very probably would have discovered it tomorrow.” IP stifles invention and innovation by granting a monopoly over ideas.

If Satoshi had not thrown Bitcoin into the public domain, it is difficult to imagine the explosion of cryptocurrencies that’s occurred in so short a period of time. Rather than hinder invention and innovation, the free and wild Bitcoin has caused a deluge of new ideas and expressions of them.

Significantly, Satoshi did not impoverish himself by going public as evidenced by the one million bitcoins in his wallet. Freedom and profit are not at odds. Monopoly and progress are.

What do you think about IP in relation to Bitcoin? Let us know in the comments below.

Images via Pixabay and GQ

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