Enjoy these framework posts! You know we are incredibly early when seemingly obvious use cases for this new technology have not yet been explored or are in the infancy stages of development.
In your first example, STO sits on top of the NBA contract instead of replacing it? Does this mean the NBA pays the investors instead of the player? If they were to pay the player, what's stopping him from losing it all and having no money to pay the investors? I don't see how it is collateralized unless the players' investment in the S&P is also in token form. Sorry, finding the example a bit confusing.
I wrote a white paper for a legal DAO which bridges the gap you refer to, but we are too early and I didn't find the right people to work with.
In the future, one of the "offshore" jurisdictions based on English common law could capture a large section of this market by allowing shares in its domestic corporations to be tokenized. There are AML policy reasons against any sort of bearer instrument but perhaps a way will be found.
This structure would allow a "legal DAO" to set up an insolvency remote special purpose vehicle, lend the money to the player and take security, and then the income stream from the repayments of principal and interest flow to the token holders (e.g. through a buy back and burn).
Securitizing streams of receivables is interesting and the first decentralized org to build a name in this space is going to be enjoying some basis points for many years to come. There's probably the expertise in the BowTiedJungle to get it done.
How do the realities of the physical world keep synced with the digital world?
Say someone owns a house and the Deed becomes an NFT. The owner dies and doesn't leave access to his wallet. That deed is effectively "gone" forever.
Now you have an NFT mapped to a real object - and the object will still exist for someone to take, but the NFT will no longer be accessible.
Multiply this by 100X, now the chain doesn't match what you're seeing in the real world and we're basically back to the current centrally controlled system.
Genuinely confused how an immutable ledger works with a very mutable real world at scale.
Individuals can't own land - doctrines of resumption/expropriation exist (almost) everywhere.
Posession of physical land requires a credible local monopoly on force to have any value. Can't ever be natively digital.
The only thing blockchain technology achieves is making the process of updating the State's database of land rights more efficient. In your example, anyone proving hiself an heir to the satisfaction of the local courts/land registration system can have the NFT transferred to their wallet. (or the "lost" NFT is burned and a new one "minted", by the State)
The disintermediation benefits will be massive though. Imagine - you can *instantly* get a loan against your property, through software which matches you with the most favourable terms from a *global* pool of lenders. When you buy, you can check for adverse rights affecting the land and know the answer for sure. The seller can't commit fraud regarding the boundaries/extents, rights attached, or the existence of any secured creditors. The settlement process will be quick. Tokens representing similar land (type, permitted use/zoning, location, local demographics) can be combined and tranched for use in public secondary markets (speculators, pension funds) - without rent seeking banks collecting huge fees.
I'm 100% sold on Web 3.0 value, but what was stopping athletes/celebs from securitizing future income streams using centralized Web 2.0?
In fact, let's go a step further - since we're now dealing with the off-chain world, we need to protect against them selling say 150% of the note and scamming investors. They could do this through two different crypto projects to hide intentions.
Do you believe that an industry like online sports gambling could explode if someone like Draftkings were to utilize NFTs to allow users to trade futures bets on a secondary marketplace? It would be similar to how investors buy and sell options before expiration dates and Draftkings could collect a small fee for every transaction on its secondary marketplace. Do you think investors would see this as a viable asset class to diversify into as it has no correlation to other financial markets?
Gambling middle men won't exist. You can just create contracts between each other and remove draft kings entirely (person making the book and taking a cut)
The way, I read it STO would be able to be applied to business contracts as well. Business A gets a contract to provide Submersible pumps for 5 years. Can get 1/2 the capital upfront to service the order and pay interest to all of the backers. Removes the barriers to entry that dealing with bankers creates where relationships are more important than the numbers on the screen.
How is an 'access token' NFT substantially different from a log-in or cookie currently used? Won't people still screenshot or copy/paste information once they use the access token?
I can see how Netflix might find using NFTs easier than log-ins, but from the user end, how would the UI meaningfully change?
While it is always possible to screen cap every single post or every clip, it makes it a bigger headache.
Right now you can just forward information if you're scummy
In the case of an NFT, you have to have a unique token.
Expand the future (more like 10 years) now imagine a VR world. You put on your VR headset which has an NFT associated with it. If you don't have the right NFT you can't walk into certain digital rooms or access certain digital content. Once the content is locked into the VR world (web 3) you can't just "screen cap it" since you'd have to live stream within a VR headset
It's not a dumb question. The answer is nothing. But the more complex the user experiences enabled by token ownership, the more friction/headache in copying and publishing them for non-holders. E.g. watching a video is a dead simple interaction - press play, watch. Super simple to copy. Same for a song or an article/blog post (like this one). But for a game? An immersive world? The rights to trade things online? Earning DeFi yield? Access to AR overlays in your everyday life? These things can't be copied as easily. Still early days.
Exactly. Like most things in life we try to jump to the "in the end it looks like this". In reality it's a gradient and you'll slowly build up more features to help with privacy
In order to NFT physical objects, ideas on how they would be mapped on chain? Would it be similar to a VIN? Or scan an RFID.... the supply chain architecture is an interesting use case.
Pilots in this area (Land registry, etc) have been going on since 2014 or earlier. It's not the tech that's holding it back. It's regulations, arguably user experience, and security concerns. That NFT would need to be legally recognized. Also, would kind of suck to lose one's house in a wallet hack.
For e.g. tomatoes, NFT the RFID or QR code on the box. Not perfect, doesn't solve 100% of supply chain friction, but maybe 60-80%? The friction there comes from fragmentation. It will work better the more people use the SAME supply chain tracking data formats and protocols. And that's a human coordination problem, which takes time.
Enjoy these framework posts! You know we are incredibly early when seemingly obvious use cases for this new technology have not yet been explored or are in the infancy stages of development.
In your first example, STO sits on top of the NBA contract instead of replacing it? Does this mean the NBA pays the investors instead of the player? If they were to pay the player, what's stopping him from losing it all and having no money to pay the investors? I don't see how it is collateralized unless the players' investment in the S&P is also in token form. Sorry, finding the example a bit confusing.
I wrote a white paper for a legal DAO which bridges the gap you refer to, but we are too early and I didn't find the right people to work with.
In the future, one of the "offshore" jurisdictions based on English common law could capture a large section of this market by allowing shares in its domestic corporations to be tokenized. There are AML policy reasons against any sort of bearer instrument but perhaps a way will be found.
This structure would allow a "legal DAO" to set up an insolvency remote special purpose vehicle, lend the money to the player and take security, and then the income stream from the repayments of principal and interest flow to the token holders (e.g. through a buy back and burn).
Securitizing streams of receivables is interesting and the first decentralized org to build a name in this space is going to be enjoying some basis points for many years to come. There's probably the expertise in the BowTiedJungle to get it done.
Thanks. Something like that would make sense. Food for thought.
I don't know the answer to this. Security assignment of contractual rights in favour of a trust for the benefit of the token holders may work.
Amazing Post , really starts to tie the theory to real-world applications.
Such a good framework for thinking about NFTs going forward!
How do the realities of the physical world keep synced with the digital world?
Say someone owns a house and the Deed becomes an NFT. The owner dies and doesn't leave access to his wallet. That deed is effectively "gone" forever.
Now you have an NFT mapped to a real object - and the object will still exist for someone to take, but the NFT will no longer be accessible.
Multiply this by 100X, now the chain doesn't match what you're seeing in the real world and we're basically back to the current centrally controlled system.
Genuinely confused how an immutable ledger works with a very mutable real world at scale.
Individuals can't own land - doctrines of resumption/expropriation exist (almost) everywhere.
Posession of physical land requires a credible local monopoly on force to have any value. Can't ever be natively digital.
The only thing blockchain technology achieves is making the process of updating the State's database of land rights more efficient. In your example, anyone proving hiself an heir to the satisfaction of the local courts/land registration system can have the NFT transferred to their wallet. (or the "lost" NFT is burned and a new one "minted", by the State)
The disintermediation benefits will be massive though. Imagine - you can *instantly* get a loan against your property, through software which matches you with the most favourable terms from a *global* pool of lenders. When you buy, you can check for adverse rights affecting the land and know the answer for sure. The seller can't commit fraud regarding the boundaries/extents, rights attached, or the existence of any secured creditors. The settlement process will be quick. Tokens representing similar land (type, permitted use/zoning, location, local demographics) can be combined and tranched for use in public secondary markets (speculators, pension funds) - without rent seeking banks collecting huge fees.
I'm 100% sold on Web 3.0 value, but what was stopping athletes/celebs from securitizing future income streams using centralized Web 2.0?
In fact, let's go a step further - since we're now dealing with the off-chain world, we need to protect against them selling say 150% of the note and scamming investors. They could do this through two different crypto projects to hide intentions.
Do you believe that an industry like online sports gambling could explode if someone like Draftkings were to utilize NFTs to allow users to trade futures bets on a secondary marketplace? It would be similar to how investors buy and sell options before expiration dates and Draftkings could collect a small fee for every transaction on its secondary marketplace. Do you think investors would see this as a viable asset class to diversify into as it has no correlation to other financial markets?
Gambling middle men won't exist. You can just create contracts between each other and remove draft kings entirely (person making the book and taking a cut)
The way, I read it STO would be able to be applied to business contracts as well. Business A gets a contract to provide Submersible pumps for 5 years. Can get 1/2 the capital upfront to service the order and pay interest to all of the backers. Removes the barriers to entry that dealing with bankers creates where relationships are more important than the numbers on the screen.
That is accurate.
Love these kind of posts!
How is an 'access token' NFT substantially different from a log-in or cookie currently used? Won't people still screenshot or copy/paste information once they use the access token?
I can see how Netflix might find using NFTs easier than log-ins, but from the user end, how would the UI meaningfully change?
While it is always possible to screen cap every single post or every clip, it makes it a bigger headache.
Right now you can just forward information if you're scummy
In the case of an NFT, you have to have a unique token.
Expand the future (more like 10 years) now imagine a VR world. You put on your VR headset which has an NFT associated with it. If you don't have the right NFT you can't walk into certain digital rooms or access certain digital content. Once the content is locked into the VR world (web 3) you can't just "screen cap it" since you'd have to live stream within a VR headset
Maybe a dumb question, but what's stopping somebody in the future to setup a livestream of the original livestream that is accessible only using NFT?
It's not a dumb question. The answer is nothing. But the more complex the user experiences enabled by token ownership, the more friction/headache in copying and publishing them for non-holders. E.g. watching a video is a dead simple interaction - press play, watch. Super simple to copy. Same for a song or an article/blog post (like this one). But for a game? An immersive world? The rights to trade things online? Earning DeFi yield? Access to AR overlays in your everyday life? These things can't be copied as easily. Still early days.
Exactly. Like most things in life we try to jump to the "in the end it looks like this". In reality it's a gradient and you'll slowly build up more features to help with privacy
Great summary. Lots of details would need to be filled in but this will happen, probably faster than we think. Thank you
In order to NFT physical objects, ideas on how they would be mapped on chain? Would it be similar to a VIN? Or scan an RFID.... the supply chain architecture is an interesting use case.
Yes so your home has a Deed to it. Unique ID. Just attach the to NFT. Now that NFT represents your home since each home is unique it is a 1/1 NFT
Pilots in this area (Land registry, etc) have been going on since 2014 or earlier. It's not the tech that's holding it back. It's regulations, arguably user experience, and security concerns. That NFT would need to be legally recognized. Also, would kind of suck to lose one's house in a wallet hack.
For e.g. tomatoes, NFT the RFID or QR code on the box. Not perfect, doesn't solve 100% of supply chain friction, but maybe 60-80%? The friction there comes from fragmentation. It will work better the more people use the SAME supply chain tracking data formats and protocols. And that's a human coordination problem, which takes time.
Correct, so more regulatory tape = less likely to be adopted soon. Lower regulation = faster adoption