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It’s very obvious what the author wants to accomplish, but I would ask how smart contracts make this “super doable”? >I could sell shares of my house such that

It’s very obvious what the author wants to accomplish, but I would ask how smart contracts make this “super doable”? >I could sell shares of my house such that they confer only ownership of the economic value of the house at time of exit (sale, my death, etc.) or the shares could be re-sold to someone else if the housing market here gets hotter, etc. but I maintain ownership of the right to occupy the house. So assuming you create the asset backed tokens via smart contract...when you sell the house and pocket 100% of the proceeds (nothing personal, just hoping for the best and planning for the worst), how am I to enforce my asset backed token in court? What’s the jurisdiction? Where the house is or where I am (the injured is)? It would be very inconvenient for me to have to bring suit in your jurisdiction not mine. What if I sell the token and you don’t pay out the buyer am I joint and severally liable to the buyer? Assuming there is standing and personal jurisdiction, how does the court know what type of ownership the token creates or created if any at all? You claim it’s an economic interest, but how is the court to decide the ownership/rights over say: fee simple, fee simple defesable, with condition subsequent, joint tenancy, tenancy in common? Also, maybe the token is not enforceable because it violates the statute of frauds (real estate contracts must be in writing... is a smart contract/code/token a writing that’s satisfies the statute of frauds?), or does the smart contract violate the law of perpetuity? It’s definately “super doable” to create a token on Ethereum via smart contract (I’ve made multiple tokens myself), but I think it’s anything but clear a asset back token can be created to represent ownership in real estate claiming it’s a simple economic interest without addressing a quagmire of legal issues and enforceability. Even then it’s all theory until it gets tested in the courts and precedent is set.

wsinks 9y ago
Hey Will Brown, I'm curious about the implementation of creating a token on Ethereum. Have you written anything about that? And I completely agree about the courts needing to decide. A bizarre idea - should we generate a lawsuit as performance art? To establish precedence? That's a scary world if it's possible.
- nemild 9y ago
  See: https://www.ethereum.org/token https://www.ethereum.org/token Look up ERC 20 - it's the standard token contract spec. Should be easy to understand if you program other languages. Also, I wrote a Solidity tutorial (pull requests welcome as the language has changed a bit since I wrote it): https://learnxinyminutes.com/docs/solidity/ https://learnxinyminutes.com/docs/solidity/
- will_brown 9y ago
  I haven’t written anything myself, but I can point you to https://beta.proofdashboard.com https://beta.proofdashboard.com it’s the platform I used to experiment, first creating tokens for free on their blockchain and then on the Ethereum blockchain when I felt comfortable with Ethereum wallets/smart contracts/exchanges. Funny enough I believe the initial iteration of Proofsuite was specifically to subdivide real estate with asset backed tokens, but they launched with a great number of tools to create your own tokens. I would also recommend their YouTube videos/tutorials. As to generating a lawsuit for performance art...the short answer is: do not do that. If there is a real and actual controversy that is one thing, but - and I can’t stress this enough - consult a lawyer. Playing fast and loose with the courts can result in dismissal of cases with prejudice and even court ordered sanctions. There is probably room for anyone who has purchased an asset backed token to file a declaratory judgement, basically where the court determines the legal rights of the parties without an actual order or award of damages - still you would want to consult an attorney in your jurisdiction first.
kolinko 9y ago
There are a few projects doing tokenisation of assets. The way it can be accomplished is by transferring the asset rights (in writing) to a foundation, which has it written in it's bylaws that it will transfer it back to a real person if a smart contract tells it to do so. We are testing a similar process with physical objects at Trivial.co, and you can read more on details in the whitepaper: https://www.trivial.co/static/website/technical_whitepaper.pdf https://www.trivial.co/static/website/technical_whitepaper.p... . Our case is a bit simpler, because with regular items there is no requirement to have a written contract, but the model would work just as well for property. We did a lot of legal research considering various models for handling this. One of the options that didn't work was tokens representing ownership rights - it would be too difficult because of the variety of international rights, and issues with handling inheritance/theft, and so on. The details / terms of service / etc are still being ironed out by the legal team, but it seems so far that this concept should work well.
- will_brown 9y ago
  >which has it written in it's bylaws that it will transfer it back to a real person if a smart contract tells it to do so. It all sounds good, but just because a smart contract tells a Foundation/business/individual to do something, does not mean they will act accordingly. In other words it’s not a trustless system, in fact in your very example there is a legal entity (foundation) with a legal document (by-laws). These types of transactions result in legal disputes regularly off blockchain, I just don’t see how smart contracts/tokens a. Fix that; or b. Even make it better/less likely. Just an example, say a self driving car is owned by the foundation and it’s generating revenue by doing rides for hire, so you want to buy a % via token. What if the foundation fails to file its annual report and is now no longer in good standing with the state and is administratively dissolved? Now you’re in a position where a. You could be personally liable as an owner for any accident of the car (piercing the corporate veil since the foundation no longer exists and provides liability protection, assuming it ever did) and b. The car (like any other asset) can not be legally transferred out of a dissolved entity to another owner (meaning your liquidity is gone). That’s a wild hypothetical just for fun, but the main one is the same as any other business transaction what if the foundation (seller) pockets the money from the sale of the asset and doesn’t pay the token holder. There are serious questions regarding how the courts will handle claims from token holders, as opposed to being a party to a written contract (which can still take wild swings in the courts).
leashless 9y ago
My current company, http://mattereum.com http://mattereum.com, is a smart contract legal services firm which focusses exactly on the problem of making smart contracts which transfer off-chain assets legally enforceable. Real estate is a hard case, but by no means impossible, particularly if a custodian can hold the assets in the transaction. This approach is well understood. Tokenization of these assets could make the resulting token a security. Licensing and regulations would then apply. We can help with that maze too.
- random023987 9y ago
  > Real estate is a hard case, but by no means impossible, particularly if a custodian can hold the assets in the transaction. This approach is well understood. So perhaps we could use an entity that is experienced in holding real estate assets that have outstanding obligations against them... like a bank? And then, instead of using cryptocurrencies that burn more electricity to service my "tokenized-crypto-mortgage" on my house than my actual house, I could get a "traditional mortgage"! Hold my beer, I'm going to issue an ICO for this idea.
  - ftlio 9y ago
    Trust = money. Do you think banks exist for free? What are the costs of maintaining a system of banks capable of acting as a trusted custodian in such a transaction, covering every jurisdiction the globe over? Have you amortized the cost of aircraft carriers, diplomats, social and class mobility, the set of externalities that ultimately end up reconciled through war and collapse? We're trying to build a more stable system here. Cryptocurrencies are way cheaper in the long run. Some people have learned this the easy way, most will learn it the hard way.
    - random023987 9y ago
      > Do you think banks exist for free? What are the costs of maintaining a system of banks capable of acting as a trusted custodian in such a transaction, covering every jurisdiction the globe over? Have you amortized the cost of aircraft carriers, diplomats, social and class mobility, the set of externalities that ultimately end up reconciled through war and collapse? Whew, thank god Bitcoin got rid of all the aircraft carriers. And class mobility, I was wondering how to solve income inequality, but who knew it was as simple as Blockchain! Blockchain! Blockchain!

wsinks 9y ago

Hey Will Brown, I'm curious about the implementation of creating a token on Ethereum. Have you written anything about that? And I completely agree about the courts needing to decide. A bizarre idea - should we generate a lawsuit as performance art? To establish precedence? That's a scary world if it's possible.

nemild 9y ago
See: https://www.ethereum.org/token https://www.ethereum.org/token Look up ERC 20 - it's the standard token contract spec. Should be easy to understand if you program other languages. Also, I wrote a Solidity tutorial (pull requests welcome as the language has changed a bit since I wrote it): https://learnxinyminutes.com/docs/solidity/ https://learnxinyminutes.com/docs/solidity/
will_brown 9y ago
I haven’t written anything myself, but I can point you to https://beta.proofdashboard.com https://beta.proofdashboard.com it’s the platform I used to experiment, first creating tokens for free on their blockchain and then on the Ethereum blockchain when I felt comfortable with Ethereum wallets/smart contracts/exchanges. Funny enough I believe the initial iteration of Proofsuite was specifically to subdivide real estate with asset backed tokens, but they launched with a great number of tools to create your own tokens. I would also recommend their YouTube videos/tutorials. As to generating a lawsuit for performance art...the short answer is: do not do that. If there is a real and actual controversy that is one thing, but - and I can’t stress this enough - consult a lawyer. Playing fast and loose with the courts can result in dismissal of cases with prejudice and even court ordered sanctions. There is probably room for anyone who has purchased an asset backed token to file a declaratory judgement, basically where the court determines the legal rights of the parties without an actual order or award of damages - still you would want to consult an attorney in your jurisdiction first.

kolinko 9y ago

There are a few projects doing tokenisation of assets. The way it can be accomplished is by transferring the asset rights (in writing) to a foundation, which has it written in it's bylaws that it will transfer it back to a real person if a smart contract tells it to do so. We are testing a similar process with physical objects at Trivial.co, and you can read more on details in the whitepaper: https://www.trivial.co/static/website/technical_whitepaper.pdf https://www.trivial.co/static/website/technical_whitepaper.p... . Our case is a bit simpler, because with regular items there is no requirement to have a written contract, but the model would work just as well for property. We did a lot of legal research considering various models for handling this. One of the options that didn't work was tokens representing ownership rights - it would be too difficult because of the variety of international rights, and issues with handling inheritance/theft, and so on. The details / terms of service / etc are still being ironed out by the legal team, but it seems so far that this concept should work well.

will_brown 9y ago
>which has it written in it's bylaws that it will transfer it back to a real person if a smart contract tells it to do so. It all sounds good, but just because a smart contract tells a Foundation/business/individual to do something, does not mean they will act accordingly. In other words it’s not a trustless system, in fact in your very example there is a legal entity (foundation) with a legal document (by-laws). These types of transactions result in legal disputes regularly off blockchain, I just don’t see how smart contracts/tokens a. Fix that; or b. Even make it better/less likely. Just an example, say a self driving car is owned by the foundation and it’s generating revenue by doing rides for hire, so you want to buy a % via token. What if the foundation fails to file its annual report and is now no longer in good standing with the state and is administratively dissolved? Now you’re in a position where a. You could be personally liable as an owner for any accident of the car (piercing the corporate veil since the foundation no longer exists and provides liability protection, assuming it ever did) and b. The car (like any other asset) can not be legally transferred out of a dissolved entity to another owner (meaning your liquidity is gone). That’s a wild hypothetical just for fun, but the main one is the same as any other business transaction what if the foundation (seller) pockets the money from the sale of the asset and doesn’t pay the token holder. There are serious questions regarding how the courts will handle claims from token holders, as opposed to being a party to a written contract (which can still take wild swings in the courts).

leashless 9y ago

My current company, http://mattereum.com http://mattereum.com, is a smart contract legal services firm which focusses exactly on the problem of making smart contracts which transfer off-chain assets legally enforceable. Real estate is a hard case, but by no means impossible, particularly if a custodian can hold the assets in the transaction. This approach is well understood. Tokenization of these assets could make the resulting token a security. Licensing and regulations would then apply. We can help with that maze too.

random023987 9y ago
> Real estate is a hard case, but by no means impossible, particularly if a custodian can hold the assets in the transaction. This approach is well understood. So perhaps we could use an entity that is experienced in holding real estate assets that have outstanding obligations against them... like a bank? And then, instead of using cryptocurrencies that burn more electricity to service my "tokenized-crypto-mortgage" on my house than my actual house, I could get a "traditional mortgage"! Hold my beer, I'm going to issue an ICO for this idea.
- ftlio 9y ago
  Trust = money. Do you think banks exist for free? What are the costs of maintaining a system of banks capable of acting as a trusted custodian in such a transaction, covering every jurisdiction the globe over? Have you amortized the cost of aircraft carriers, diplomats, social and class mobility, the set of externalities that ultimately end up reconciled through war and collapse? We're trying to build a more stable system here. Cryptocurrencies are way cheaper in the long run. Some people have learned this the easy way, most will learn it the hard way.
  - random023987 9y ago
    > Do you think banks exist for free? What are the costs of maintaining a system of banks capable of acting as a trusted custodian in such a transaction, covering every jurisdiction the globe over? Have you amortized the cost of aircraft carriers, diplomats, social and class mobility, the set of externalities that ultimately end up reconciled through war and collapse? Whew, thank god Bitcoin got rid of all the aircraft carriers. And class mobility, I was wondering how to solve income inequality, but who knew it was as simple as Blockchain! Blockchain! Blockchain!