The Econmist - USA (2021-10-30)

22 Leaders TheEconomistOctober30th 2021

ment  now  frets  that  they  are  not  having  enoughbabies.The

number of children, on average, a woman is expectedtohavehas

fallen to an ultra­low 1.3. So it is urging them to havemore.Butit

is not doing much to help them with child care. 

And  it  usually  turns  a  blind  eye  when  employers,worried

about women taking maternity leave, avoid hiringorpromoting

them. In rich countries women have been joiningtheworkforce

in large numbers since the 1990s. In China they havebeenleav­

ing it, notes the Peterson Institute for InternationalEconomics.

It  is  not  the  government’s  business  how  manychildrena

woman has. So it is fine if Chinese women ignoreMrXi’snag­

ging  and  opt  for  small  families,  or  not  to  marryatall.Butit

would  be  better  still  if  their  choices  were  unconstrained.That

means  not  only  getting  rid  of  all  rules  on  familysize,butalso

preventing employers from discriminating againstwomenwho

get pregnant, or are thought by managers to be likelytodoso.

A societydoesnothavetobedemocratictoreduceinequality

betweenthesexes.Overthepast 20 yearsChinahasachieved

greaterreductionsinmaternalmortalitythanmostothercoun­

triesatorbelowitslevelofdevelopment.Itsaysthatnearlyas

manygirlsasboysenrollinChineseschools,andthatwomen

havefoundedmorethanhalfthecountry’sinternetstartups.

Butthepatriarchalvaluesthatauthoritarianleadersfoster

makeprogresshardertoachieveinareaswheregrassrootsactiv­

ismisneeded.It tookwidespreadparticipationbywomeninthe

#MeToomovementtoshocktheWestoutofitscomplacency

aboutsexualharassment.Ithasrequireddoggedcampaigning,

notleastbywomen,toforcegovernmentsandbusinessestopay

moreattentiontopaygapsbetweenwomenandmen.

Foraslongascivilsocietyanda freepressareseenasa threat

topartyrule,suchpressurecannotplayitsproperpartinChina.

Thatisa tragedyforChinesewomen. n

I

f nothing else, ourauctionofannftwasentertaining—and

lucrative. Starting on Monday October 25th TheEconomistin­

vited bids for a non­fungible token of an image ofourrecentcov­

er on decentralised finance (see Finance & economicssection).

nfts are a digital property deed that lives on a blockchainand

can be bought on financial platforms using digitalcurrencies.At

one point, a club of would­be bidders formed a decentralisedau­

tonomous  organisation,  called  “RabbitHoledao”, to try to

crowd­source enough funds to buy our token. A scrambleofbids

forced the winner, who went by the alias @9x9x9,tomakeanof­

fer  of  99.9  ether—around  $420,000.  The  proceeds,netoffees,

taxes  and  transaction  costs,  will  be  donated  toTheEconomist

Educational Foundation, an independent charitywesupport.

Plenty of others are having fun, too. Pokémon­stylenfts are

being  bred  by  a  quarter  of  a  million  users  of

Axie  Infinity,  a  video  game.  Armies  of  art  fans

trade digital collectables. nfts on the Ethereum

blockchain  are  today  worth  $14bn,  up  from

$340m  in  2020.  Jefferies,  an  investment  bank,

thinks the total will reach $80bn by 2025. 

At  this  point  you  may  well  have  a  nagging

doubt: what exactly do the owners of nfts get?

The best way of thinking about this is that nfts

are a way to unbundle property rights. Having legal title to a con­

ventional asset typically confers a standard set of benefits. With

a house, car or company stock, your title brings proof of owner­

ship, the right to exclusive use, the ability to charge for its use by

others and the right to receive the proceeds of a sale.

In high finance it is common, with the help of pricey lawyers,

to slice and dice elements of these rights, as with a derivatives

contract.  But  this  kind  of  flexibility  is  not  cheaply  available  to

consumers and small firms. nfts have the potential to change

that. In our auction we defined the property rights using the de­

fault conditions on the platform. So the new owner of our nft

has rights akin to a licence: they can display the image in certain

ways,  but  cannot  commercialise  it  (by,  for  instance,  selling  t­

shirts with the image on them). On behalf of the charity we sup­

port,wealsohavetheabilitytotakea 10%cutofanyfuturesale

ofthetoken.Intheoryannftsalecanembodyanycombination

ofpropertyrightsdesignedbytheseller.Thereareotheradvan­

tages.Apublic,irrevocablerecordofthetransactionexistsona

blockchainandworkswithotherdigitalapplications.

Yetforalltheirconceptualpromise,nfts havethreebigprac­

ticalflaws,asourexperimentshowed.Despitetheslickinter­

faceofnftplatforms,theprocessisa nightmare.It includesset­

tingupa digitalwallet,fundingit topayanyfeesassociatedwith

creatingannft, creatingthetokenandfindinga waytoconvert

theproceedsintoconventionalmoneyina bankaccount.For

mostlegalandtaxadvisersthisisallvirginterritory.Theprocess

isexpensive:wepaid“gas”,a fancywordforfees,andotherlev­

ies.Inordertobecomemainstream,applicationsindecentral­

isedfinancewillhavetobeaseasytouseasan

iPhoneandcheaperthandealingwithconven­

tionalfinancialintermediaries.

Thesecondproblemisenergy.Ourmodest

experimentcreatedasmanyemissionsasa seat

onalong­haulflight.Mostplatformsareex­

ploringhowtolowertheirenergyuse.Ifnfts

aretobetheNextBigThing,theymustinnovate

theirwaytowardsa carbon­neutralfootprint.

A  third  concern  is  contract  enforcement.  We  hope  that  this

will not be an issue for our token, because the asset—a unique

digital representation of a cover image already in wide circula­

tion—will be used within decentralised finance, and there is no

obvious incentive to misuse it. But for nfts that refer to assets

outside this self­contained world, such as a patent or a building,

the property rights conferred by the nft may conflict with other

contracts, and courts may not recognise the digital agreement.

This is starting to change. A flat in Kyiv changed hands this

year, when an nft representing it was sold in a deal recognised

by  Ukraine’s  authorities.  But  decentralised  finance  has  a  long

way to go before it is integrated with the legal system. The to­do

list is daunting, but if these problemsareresolved, nfts could

yet become more than a token gesture.n

Our NFT auction reveals thepromiseofdecentralisedfinance—andsomebigproblems

The Economist’s NFT auction

Bid price, 2021, $’000

400

200

0

Oct 25th Oct 26th

1:00 00:00 06:00 12:00 18:02

The fun in non-fungible

Decentralised finance