Meat vs Art — Tokenizing Real World Assets

I know people have promised you that blockchain can solve all the worlds issues.

Today that promise goes unfulfilled.

But, we are the people living through the movie. We’re not watching it after the story has already been written and edited into a 2 hour package.

A promise like ‘make everything better’ leads me personally to think that we can do anything.

Tokenizing Real World Assets — Meat vs. Art

Even if we can do anything, there are still good ideas and bad ideas. Bad idea’s take a lot of time, money, and other resources. In some cases like shipping meat, it means inventing new hardware. Good ideas are simple to understand, cheap to implement, and make a difference to the people who jump on board.

Though the first decade of blockchain has been like a shit sandwich: hard to swallow….

I do think there are a couple of very cool and valuable ways to use digtal tokens that represent real world ‘things’.

First lets take a look at a bad idea and why it’s a bad idea…

Putting meat on the blockchain is a bad idea.

Meat is

  1. Packed in cold storage lockers
  2. Shipped in cold storage containers
  3. Received in cold storage freezers.

To really ‘track’ meat in a more valuable way than we do today it would take a LOT of new tools like an internet connected, blockchain verified thermometer. Do we really need that? In every truck?

Meat needs a lot of infrastructure to be tracked on the blockchain.

Would building out the capabilites really create a solution?

Consider this scenario:

Imagine for a second that some really shitty person waited until a truck full of meat was en-route, broke in, and tainted the meat. We live in the real world, with cash and credit. That means the blockchain could only help track the tainted meat up to where it was sold. It couldn’t prevent the meat from being sold, or notify the buyer unless the sale itself was on the blockchain too.

To make this work, not only do the logistic companies need to be on chain but so would the the farmer, shipper, grocery store, AND consumer. Plus, they’d all have to be on the same blockchain to get even a tiny value for our MASSIVE investment. Remember… we had to build hardware that doesnt exist yet.

We haven’t even considered the legal issues around who can order privately purchased stock (groceries) to be removed from the shelves of a private store. It gets dirty quick (pun intended).

Putting Art on the Blockchain Could be a Good Idea

Tokenizing Art & Collectibles could be a good idea.

Art has a different set of problems finding it’s way to the blockchain. Verifying the art is tricky business. Maintaining copyright is tough today. Both take experts and money. The experts play a role in the process, and if art were like meat, they would also have to buy into the same blockchain.

But with Art, we can bite off a small chunk of work. We can do it with no investment in hardware or human capital (like verifying the art). Even a small solution that doesn’t interact with any other technology has the chance to create a massive value for the world of collectables.

Consider 2 scenarios similar scenario to the meat…

1. A shitty person owns some great Art. The owner uses a private sale listing and broker/ dealers. These agents are known to be ‘confidential’. They find a buyer on the hush hush. The art owner passes off a replica of their piece as authentic, selling a forgery for a hefty profit.
The owner repeats this scam with new broker/dealers over and over again.

In this scenario, if the owner of the Art has a token representing the authenticity of the art, they can only sell it once. Let that sink in for a second. By putting just the bare minimum — name, year, artist, etc… — on the blockchain, a token can be created that can prevent a 2nd, 3rd, 4th, sale?

You’re damn right. Satoshi called that the ‘double spend’ problem.

Note: simply putting authenticity data on the blockchain, can cost less than 1 penny.

If the buyers all force the seller to transfer the tokenized (digital authenticity certificate) version of the art, the cheat can only profit from the scam exactly 1 time.

In this scenario, only the buyer and the seller forces the use of the blockchain (not the appraisers etc..). Selling the art means they have to transfer the token to the new owner. Having such a small participant list, makes getting all the people to play by the rules, a much easier task.

It is true that the new owner may then go mistakenly sell the frauduent art again (like I said we’re not solving for ALL the problems yet). But thats still only 1 continued avenue of fraud. Today, they could open up an avenue of fraud for every copy the charlatan creates.

While it’s still crappy that the fraudster could sell a replica and keep the original, their scam is limited to only duping one unsuspecting rube. Not a whole lot of them.

Small investment, Big protections.

Scenario 2:
A cunning Pierce Brosnan look-a-like is an accomplished art theif. He saunters into the Louvre and waltzes out with a tokenized piece of art, but not the token.

At this point in the chain of events, first the art can no longer be truly authenticated. No matter how much the experts hem-and-haw over the details, even criminal buyers wont be able to confindently say this bounty is original.

I have to imagine that it would be gut wrenchingly difficult for a buyer to part ways with millions of dollars over something that might be (and probably is without the token) fake.

From there forward each sale is tainted by with the buyer knowing the provenance (chain of ownership to prove authenticity) is broken. Stolen art by it’s very nature of being stolen will be worth-less (not worth 0 just less than authenticated art).

I know you’re thinking: I’m not an Art investor and I dont care what happens at the Louvre. How does that apply to my life?

Well maybe it doesnt.

But there are a lot of sneaker heads out there paying $1000’s of dollars for untracked un-authenticated collectible Supreme & Nike gear.

Limited addition action figures, Limited Mint Coins, Gucci and LV handbags and purses,collectable stamps. all sold without proof of ownership on-chain.

All of these limited edition items have a resale value that is much, much higher when they can be proven to be authentic.

If the person selling you the item doesnt have its token… that shit aint real.

Even if it is, it isnt.

For a relatively small investment, brands can bring a big value to their after-market evangelists.

All that needs to be done is for the seller to be able to verifyably prove they either

  1. Bought the item from the brand directly; OR
  2. Bought the item from someone who participated in the token transfer through each sale of goods, all the way back to the original purchase from the brand.

So, what would it take to get ownership of Yeezy’s tracked on the Blockchain? ~0.10 cents per sale.

How much infrastructure would Nike need?
A QR Code printer on the reciept and a sealed box insert.

Is there a real world analogy for this kind of tracking in the non-blockchain world we live in today?

Yes. Its called: Carfax.

But, re-tooling the idea of Carfax for the blockchain would be a huge undertaking. There are more actors like body shops, and quick lubes.

With brand label provianace tracking …

We are talking very minimal investments, with big big results.

I’m focused on trying to solve small but real problems in ways that werent werent possible in the old world. Let’s not struggle to solve problems that have impressively complex solutions that work well already.

Join Me?

Follow Me On Twitter:
Find Me On Telegram: DevelopingZack

CTO & Lead Engineer @ & |Find @DevelopingZack on Twitter & Telegram