Thread by @leashless

Alright. Let's talk about what's going to happen next with @mattereum.

Things are about to get really interesting. I'd liken what we're about to do to the invention of e-commerce. We are about to do the first sale of physical assets on Web3 which fundamentally improves on Web2.

The first thing you're going to notice: we have very poor language for talking about this innovation.

Why? It's new-new. So new we don't know how to talk about it.

Imagine trying to explain what a "domain name server" is to somebody who has never seen a web page.

We are here.

Right now there is an almost metaphysical separation between the world of "crypto" property rights, where code is law, and "fiat" property rights, where law is law.

Crypto property is global property, its jurisdiction is (roughly) "The Internet". Fiat property is in countries.

I don't know of any serious thinker on crypto who does not believe that this contest between "crypto" and "fiat" is not going to run for decades.

I believe it might be the defining fight of my lifetime, but I do not believe the answer is just HODL: sitting ducks.

The crypto oligarchy has all the faults of previous oligarchies: they like the status quo, because it makes them rich.

I am one of the few early actors who did not get very rich, and that's because I looked at my fiat law position and said "I don't like the look of this." Error?

Maybe with hindsight: but that choice to take the fiat law situation more seriously than others also turned into the research agenda which has become @Mattereum: the company that's about to bridge "crypto" and "fiat" jurisdictions into a BLENDED WHOLE, not a hostile rivalry.

Look at this example. You'll need @metamask_io
…ent-asset-passport-web.mattereum.tech/view/0x01b89bC…

Click "Certificates." Now click "sign" and put in 0.0081 ($5).

You've just created a FIAT legal obligation on another human being, valid in 160 countries. From a smart contract. Launched this in Feb 2020.

How does that fiat-legal obligation work?

Well, it's complciated - it's three years of research complciated. It involves relatively recent legislation on digital signatures signicat.com/resources/are-… and older legislation on international law newyorkconvention.org/english welded together

But what we have is a legal machinery for creating FIAT WORLD LEGAL OBLIGATIONS USING SMART CONTRACTS, VALID IN 160 COUNTRIES.

Now, that's where language breaks down. This is where typical investors go "whut?" and switch off - thank you to the bold who have carried us so far!

So let's break this down: Alice obligates herself to do something, by fiat contract law. She writes down an offer, like "I will sell my house for 50 bitcoin."

Bob pays her the bitcoin. In "fiat law" they have a contract, but even today, most courts will have a hard time on it.

So the first layer of Mattereum is the arbitraton court: Alice puts the text of her contract online, almost like Docu-sign, and Bob signs-and-pays in a single step using ETH.

Alice's contract says in the event of a dispute, it goes to technically competent arbitrators. Big step!

These technically competent arbitrators meet a generally accepted standard for international arbitration, so all 160 or so countries in the New York Convention treat that arbitration award on the same basis as a local court order.

Fiat interface achieved!

We can now enforce!

Now this, right here, is a crossing-beween-the-worlds. Stringing together digital signatures and arbitration is not new: ask Ian Grigg about Ricardo. But it's not been done *properly* before on a platform with real smart contracts, and that begins to open up a very vast horizon.

Once you get that sort of "dial tone" between Ethereum smart contracts and the global fiat legal system over the international arbitartion rail, it becomes possible to construct *real business processes* which occur half in the blockchain space, and half in the world of Fiat Law.

The contract goes on for many, many pages. Vast time and effort went into its construction. 20 years from now it will have as many versions as Linux, refined and sharpened for specific kinds of trade.

But this is a sort of "constitutional" ur-document for the intergration we do.

So what do we do with this dial tone?

Well, a contract has many parts. But something simple, like a sales contract, is a good place to start: the blockchain is a good place to sell things, particularly for sellers.

What we need is enough *buyer* protection to handle BTC etc.

Once you send BTC, it's gone. Wrong address? Gone. Fradulent sale? Gone.

So that makes fraud a killer risk: such a large risk, in fact, that there is essentially no e-commerce in BTC. You hear people talking about the alpaca socks, that's how little commerce there is in bitcoin.

So let's start by constructing buyer protection: a guarantee that the goods (physical goods!) you get will be the goods you sent over your irrevocable payment for!

That's the atomic object: BTC/ETH goes in, paid-for goods come out. Why? Because it's fast and global, unbank-like.

So we've got our "fiat-interface" to contrat law, and we want to get defintions of property *for sale*. But nobody trusts anybody, and there are no big brands to force trust.

So we have to construact a *contractual* web of trust around each item.

We do this with some experts.

The experts take their knowledge about the asset being sold, and they write it down. In a contract (of course.)

Contracts, well, we have this "dial tone" between smart- and fiat-contract, so those are enforcable.

For the sake of convenience $X gets you $Y if the expert is wrong

That's about as simple as contracts get: two parties, one promises some facts to the other, and if those facts are wrong, the other can claim some damages, to an agreed, specified limit.

In principle, easy. In practice, quite a lot of work. But that's OK, that's what we do here.

So now we have the object - the asset - tied up in a sort of legal "mini-dao" - we call this construct an "Asset Passport". It's a series of legal contracts, from experts, which tell you what something is.

…ent-asset-passport-web.mattereum.tech/view/0x01b89bC…

One might be wrong. One might lie. But not all.

So now we can quantify our risk: in order for me to lose my BTC on this deal, all 5 of these people have to be lying, and outside the 160 country radius of enforcement.

And we can bring in: escrow, collateral, insurance, and every other Fiat or Crypto technique to prove funds.

One way or the other, the Asset can be embedded in as much legal-technical security as you need to be able to buy it. The price will rise the more collateral there is attached to this thing, the more extreme the counter-measures are.

Buying a house typically costs 2% in fees.

So now we have Assets online: a physical thing. We are about to get to the exciting part, so time for a new thread.

One moment!

Top of the new thread where all this continues

https://twitter.com/leashless/status/1341556222038827009