New article in TechCrunch by Jon Evans of 11/11/2018:
“How’s this for eyebrow-raising? In London, for the last year and a half, a team of lawyers, cryptographers, software engineers, and/or former military consultants have been brewing a bizarre and/or brilliant plan for a bridge between the blockchain and the real world – a system whose success is directly proportional to the extent to which it achieves legal title over every physical object in the world.
Wait. Let me explain. Their name is Mattereum, and they are not Bond villains seeking to conquer the planet. Rather, they are trying to bridge the gap between programmable blockchain “smart contracts” and actual legal contracts. As you might imagine, that gap consists of an almost infinitely knotty tangle of legal precedents, gray areas, and jurisdictions.
Mattereum has came up with a remarkable way to sever this Gordian knot. A legal concept universal across almost all jurisdictions is that assets have owners, who can decide (within legal limits) how to dispose of them. If registrars of the Mattereum network are granted legal title over assets, the thinking goes, they can then establish on-chain smart contracts with which physical assets can be programmatically bought, sold, rented, assigned, and partitioned – and use their ownership of these assets to resolve disputes and enforce those resolutions.
That all sounds pretty abstract. Let’s talk about some real-world examples. Their flagship object right now is a Stradivarius violin valued at $9 million. Assigning legal title over that violin to one of Mattereum’s registrars (say, Mattereum itself) which then licenses control via a set of smart contracts (say, on the Ethereum blockchain) means the violin instantly becomes not just a physical asset but a digital one, which can now be programmatically tokenized and sold to multiple investors – and also means that other contractual restrictions regarding its use can be required and enforced, such as that it be played for the public X times a year in Y countries, rather than locked perpetually into a vault.
Similarly, artists could sell their work to consortiums of investors with the enforceable requirement that their art be displayed in galleries open to the public for at least 25% of every year, built-in digital interfaces for galleries and museums to book that time, income percentages allocated for foundations and to the artist themselves, and so forth. And, of course, in passing, the art’s provenance is maintained, too.
Could you do all this already, via a whole lot of legal paperwork followed by a whole lot of glacially-paced lawsuits when disputes inevitably arose? Sure. But to quote their summary white paper (PDF), which is very worth reading:
Clichés like “data is the new oil” conceal a fundamental truth: efficient discovery of availability and price radically changes the value of assets. Auctions on eBay gave value to enormous seas of illiquid assets … Some classes of illiquid assets, such as idle cars and briefly empty flats, found markets through Uber and Airbnb, liberating billions in value … the pattern is very clear: assets with a proper digital interface and history are more valuable than assets without them.
Mattereum boasts an impressive team led by Vinay Gupta, the mad-or-visionary-depending-on-who-you-talk-to global resilience guru turned Ethereum launch coordinator turned CEO, and including Ian Grigg, inventor of the Ricardian contract . And, of course, a lawyer or three. Obviously whole clouds of question marks still hover around them, notably regarding just how these smart contracts will intersect with the existing legal world(s), and how to establish trust in asset registrars to not abuse their legal title, or neglect their responsibilities – a trust which will need to rival or exceed that which accountholders have in banks.
But, like Ethereum itself, this is still a wildly ambitious, genuinely innovative, and deeply weird project; that’s much to admire. Restructuring the concept of physical asset ownership to include programmatic contracts may seem like a subtle change, but it’s one which could conceivably have massive structural repercussions and unlock enormous amounts of currently untapped potential. It’s early baby-iterative-steps yet, of course, with a panoply of pitfalls on all sides; but it’s big and bold and hopeful, and it just might do a lot of good.”