How Psychological Ownership Can Make Crypto Less Mercenary

Each year, in early December, social media comes alive with the annual flood of Spotify Wrapped. One of the more ingenious pieces of viral marketing, it requires no paid advertising on Spotify’s end. Instead, users organically share their listening habits, compiled by Spotify, out of amusement, pride, or other emotions.

Spotify Wrapped taps into a behavioral concept known as “psychological ownership” — the feeling of possession or “mineness” over a product or service. In the last decade, psychological ownership has become a core part of how we engage with digital products. Despite the lack of tangible or legal ownership, digital goods and applications have fostered psychological ownership and loyalty from users through personal investment, control, mastery, and alignment with how they see themselves. Users were more likely to stick around, stay engaged, and contribute to tech products that successfully cultivated that sense of “mineness.”

For crypto and Web3 projects, it might seem that psychological ownership would go hand-in-hand with actual digital asset ownership. But in practice, crypto projects often experience the opposite: user interest is often transactional, mercenary, and short-lived.

As the next era of the internet progresses with products that give users ownership through crypto tokens, people building in crypto and Web3 can learn a lot about psychological ownership from other categories of products/services. By applying this lens, crypto projects can foster a greater sense of psychological ownership that accompanies ownership of actual crypto assets, leading to healthier user retention and sustainable ecosystems.

Why psychological ownership is important

Think of all the products or apps you use on a daily basis and the emotions they conjure. Some material and digital products feel utilitarian and unmemorable: the car you rode in during an Uber trip or a one-time conference app may not stir any real emotion. Others inspire loyalty or affinity because of personal investment: think music playlists you curated or your Twitter profile.

This psychological state of feeling like an owner is distinct from legal ownership: individuals can feel ownership without actually being a legal owner of a product or service, and vice versa. For instance, my social media profile or my sports team reflect a feeling of ownership without formal ownership. Conversely, individuals can legally own things without having a sense of psychological ownership: consider stocks or ETFs which rarely engender that sentiment toward companies.

Over the last decade, new digital products, services, and business models have disrupted the traditional relationship consumers have had with goods/services — shifting from purchasing and owning a product outright to more access and subscription-based models. This shifting relationship introduces new levers and opens up additional design space for cultivating psychological ownership.