There is no reason, however, to assume that the institutions that worked best in the past will work best as technology changes. Capitalism rests on an assumption so fundamental that economists rarely bother making it explicit: property rights must be cheap enough to enforce.

That cost may be about to rise sharply. The important question is not whether technology can continue to protect private property, but how expensive it will become to do so.

A dollar in my bank account is mine because a bank can establish that I am me. A share of stock is mine because financial institutions recognize my claim. My house is mine because a registry records my ownership and courts will enforce it. Private property in modern economies is an economic institution built on verification.

Artificial intelligence is changing this calculation. The cost of creating plausible false identities is collapsing. AI can imitate a voice or face, fabricate a document and search at enormous scale for weaknesses in the systems we use to establish identity.

Unless authentication and security technologies keep pace, the cost of proving that people and their claims are genuine will eventually become prohibitive.

Researchers are already confronting pieces of this problem. Steven Adler, formerly of OpenAI, and more than two dozen coauthors have proposed “personhood credentials” — a way to prove that you are human without revealing who you are. Gillian Hadfield, writing in Proceedings of the National Academy of Sciences, argues that increasingly autonomous AI will require new legal infrastructure to establish identity and responsibility. Both point to the same emerging problem: establishing who is acting and who can be held accountable is becoming an economic and institutional problem in its own right.

Quantum computing could make things worse. In 2025, the BIS Innovation Hub and several central banks tested quantum-resistant cryptography in a payment system. The technology worked: transactions could be protected against the threat from future quantum computers.

But there was a significant cost. Verifying signatures took about seven times as long as with conventional cryptography, and implementing the new technology required changes across the system. Other BIS work reaches a similar conclusion. Quantum-safe finance appears feasible, but the transition will require more computing resources, investment and coordination across institutions.

Decentralized ledgers might offer an alternative. But consider what happened to Bybit, then the world’s second-largest centralized cryptocurrency exchange by trading volume. In February 2025, North Korean hackers stole approximately $1.5 billion in virtual assets, according to the F.B.I. They quickly converted some of the assets into Bitcoin and other cryptocurrencies and dispersed them across thousands of addresses on multiple blockchains.

The blockchains continued to record those transfers. But identifying the assets as stolen and trying to prevent their conversion into traditional currencies required institutions outside the ledger. The F.B.I. asked exchanges, blockchain bridges, analytics firms and other intermediaries to block transactions associated with the stolen assets. The ledger could establish where the assets went. It could not by itself resolve the underlying property claim.

Economic theory identifies clear reasons to expect pressure toward centralization. A security failure at one institution can impose costs on others, while verification itself has economies of scale. Common standards and coordinated enforcement therefore become more attractive. These forces do not make centralization inevitable. Decentralized technologies may continue to improve. But they create strong economic incentives for coordination and larger institutions.

Private property has always required collective enforcement. Capitalism needs courts, registries and the state. The question is how much. If authentication becomes much harder, protecting private property will require institutions with greater resources and authority.

We could end up needing very powerful institutions simply to preserve private property.

Singapore offers an intriguing precedent. A World Bank study estimates that 75 to 80 percent of its land is state-owned, even as the private sector plays a leading role in development. Central control over a foundational asset has coexisted for decades with an exceptionally successful market economy.

But Singapore is an exceptional case: a small city-state with unusually effective institutions. Transparency International ranks it the third least corrupt country in the world in its 2025 index, with a score of 84 out of 100. Could such a system work as well in the United States, with more than 330 million people, much less across a financial system that connects billions of people around the world? And how confident should we be that institutions given enormous control over property and transactions would remain as effective and clean at that scale, over generations?

There is a similar pressure on privacy. New technologies may allow us to authenticate ourselves while revealing very little. But where stronger authentication requires more information about us, anonymity becomes more costly.

We might still call this capitalism. But it would be a very different capitalism.

Private ownership has worked so well in part because it decentralizes decisions and gives owners strong incentives to use resources productively. If preserving those rights requires an increasingly costly and intrusive enforcement apparatus, some of that advantage is lost.

Technology may keep authentication affordable. But if it does not, the consequences go well beyond cybersecurity. Preserving private property will require institutions with ever greater authority over identity, ownership and exchange.

Markets may survive, and property may remain private in law. Yet the system underneath them would have become increasingly collective. If an authoritative institution must continuously establish who I am, what I own and which transactions are legitimate, the line between enforcing ownership and controlling it begins to blur.

Capitalism, in trying to preserve private property, may end up reinventing something resembling socialism.

Whatever we call it, we must recognize that as technology changes the cost of verification, the consequences will extend far beyond cybersecurity.

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