Yesterday’s Tomorrow is Today’s Present

When we started this company in 2017 the idea that the blockchain would be a mainstream engine of economic trade globally was a belief held by less than 10,000 people, now that is a mainstream belief.

Although we were always bullish on blockchain, we hedged our bets on AI, thinking it wasn’t quite ready for prime time in 2017, and we still think it’s a little way away from being mainstream in industries like real estate which is where the actual money is. But when real estate moves to the next transactional platform, we’re talking about half a trillion dollars a year in transaction savings, or more. It is a stupendously large amount of money, but we will show you the reasoning in this post. Mattereum is ready, we have partnerships in place (which will be announced shortly) to execute that world dominating strategy.

Before we started Mattereum, back in 2016, I could see that the future belonged to four fundamental technologies,

• VR
• AI
• robots
• the blockchain.

In the future, we could see any combination of those lifting, but leading to with very different outcomes, depending on which combination took off.

As a result, we decided to go for areas where the product we created would touch all four of those technologies, because that would optimise the capital other people were deploying to give us uplift. So, for example, if you had a system that did robotic drone survey work and then used AI to put the results into a VR system, that would have been more investable, because it used more of these technologies. The thesis was that high complexity companies that spanned multiple different technologies were going to outperform less complex companies, specifically because they were going to get uplift from capital deployed in any of their underlying technological dependencies. The companies that were going to succeed would be hybrids of many different high technologies because every single improvement in any one of those technologies would multiplicatively make their product better. If you’re a drone company, and drones get twice as good, your product is twice as good. If you’re a drone/AI/VR company, and each one of those things gets twice as good, your product gets at least eight times as good. It creates a kind of synergetic whipcrack.

What we wanted as a commercial strategy was like an eigenvector in this space of unbounded technological transformation. What could we count on to be present in all possible futures, getting a decent margin for good work in all these scenarios?

We picked lawyers and specifically contract law.

The last lawyer will fry the last cockroach in the fat of the last rat.

There are always going to be lawyers. Mattereum has always been a company for the long now; we build for today, but with an eye on the future, so we are good at seeing the ways our tech may synergize with what is yet to come. From the start, Mattereum has been about using technology to enable better transactions. It is our core. The Asset Passport technology was originally conceived in 2006 as part of a digital identity solution, far ahead of even bitcoin, never mind the blockchain or Mattereum itself, and originally involved scannable QR codes linked to a proprietary platform. That model became intimately entwined with the blockchain because the blockchain was an off the shelf solution for what the proprietary platform would have done.

So, our framework for the digital implementation of contracts goes back 20 years, to the beginning. Now that AI is finally lifting off, we are able to integrate it into the vision too, and shortly, the product. Because of our deep focus on transactions, AI does not break our model. Instead, it radically extends it.

Using AI to sell VR models of future real estate? Well if the model does not match the final building, that dispute is going to be lawyers on both sides and anything which provides technological support for that process is going to be valuable. It seemed like a trustworthy invariant.

Did I mention half trillion dollars a year? Let us show you where the paycheque is for the combined blockchain-plus-AI industry overall…

Contracts, Blockchains, and AI

So could the blockchain have been the end of all contractual disputes in trade? Sir Geoffrey Vos of the UK Jurisdiction Task Force (UKJT) thinks so, saying of the blockchain:

It will become ubiquitous in all major industrial and financial sectors, simply because it allows for the immutable recording of data, thereby reducing friction in commercial and consumer transactions and obliterating the scope for dispute as to what has occurred.

And we completely agree with that: a mutually agreed record of facts certainly will absolutely slash the scope for dispute. But, the answer, as in all legal matters, is “yes and no… well, it depends”.

AI can also be used to monitor, if not enforce, compliance with international treaties and trade rules. In particular it can analyse large volumes of data to ensure that tariffs are correctly applied, quotas are adhered to, and that counterparties are not disadvantaged by bad actors. Smart contracts could perform the enforcement function. An international treaty is much like a contract with many parties agreeing, after all, and it is not unreasonable to think that AI may significantly accelerate some aspects of international diplomacy, starting but not limited to, machine translation.

However while facts are essential in both contract and treaty, there is always the human element — humans have a habit of interpreting things. When it comes to the interpretation of the facts, and the interpretation of the contract, the blockchain cannot help, it is out of scope for a ledger to interpret the contents of a ledger. The ledger stores data.

There’s a nugget of popular knowledge that claims that screwdrivers were only invented centuries after the screw, enabling them to become a ubiquitous technology, and whether that is true or not, it is often the case that an existing technology only comes into its own when combined with a new one. So, the blockchain is great for the automation of immutable facts, but the automated interpretation of data, now that’s a different matter these days. Now we have AI. Combine AI with the blockchain and you have a technology that is great for automating immutable data connected to a technology that has the capacity to bring interpretation based on the collected wisdom of humanity (or as much of it that can be found on the internet) to the table. It may not be quite the Neuromancer/Wintermute synergy, but it is a pretty good screw/screwdriver one — the true synergy there was standardising screw threads so everything worked everywhere all the time.

So if we had blockchains and AI working together, with the right set of standards, would that be the end of all possibility for contract disputes? Could AI be the thing which finally accelerates the blockchain and puts it everywhere? Logically, if everybody has the same facts and the same analysis there should never, ever, be room for a contract dispute. The blockchain is about making sure everybody has the same facts, and AI in theory should converge on identical analysis of most simple situations. So are we now in a position where contracts will be perfect and flawless forever more? Well, nearly, but not quite. There’s one final part needed for this synergy to become as revolutionary as promised, and that part is the Mattereum Asset Passports. This unique structure puts human sourced data and AI sourced data in the same risk-on-data framework, subject to the same requirements for insurance or collateral or other pools of recoverable assets to be linked to the claims made about a transaction. This unique approach to handling data as liability is the key insight required to integrate AI into trade, bearing in mind we still occasionally encounter problems like AI hallucinations, and other more fundamental problems as we will shortly demonstrate.

So in the future, in a world with near-perfect information and near-perfect cognition, how then will contract disputes arise?

Even if both parties are using the same AI system on the same paper contracts, there is still going to be occasional contract dispute — as I said, AIs should converge on the same analysis in most simple situations, but not all situations are simple, for a start. This is because parties have different interests and different information. For example, if we take something as prosaic as a house which was bought using a blockchain/AI real estate rail, and then the homeowner discovers subsidence — a weak foundation is causing cracks to appear in the wall. Right now, at the moment of first discovery, only the homeowner knows that crack is there — the AI system does not. This information gradually spreads over time, not instantaneously, and this information gradient is critical, because when they report that fact, the counterparty should immediately own the problem and pay to make remediations without causing a dispute. But when it gets to who is responsible for the crack, there may well be multiple construction firms finger-pointing, and that is where the real scope for dispute arises. When thinking about the causes of dispute, it’s worth remembering the Five Nasty Surprises (which sound like something Mao would have come up with, but didn’t).

Let’s learn about the Five Nasty Surprises.

Five Nasty Surprises

So thinking systematically, in information-theoretic terms, about where the problems will arise in future transactions within this utopain AI-Blockchain transactional environment. What are going to be the real reasons for contract disputes?

• SMALL ERRORS (a factual error accidentally creeps in somewhere)
• GREAT DISCOVERIES (unknown unknowns — “we didn’t know biology or physics worked that way at the time”)
• SECRETS (things long-known, but only to a few)
• LIES (the AI is being deliberately misinformed)
• INTEL (the information gradient — fresh info which is not in the AI systems yet)

All of these can lead to contracts going wrong and they are inherent to the nature of transactions.

The better AI is, the less it’s going to be subject to misreading the contract, which removes that problem, but what that means is that in practice secrets, lies, and fast observation of changing conditions are going to be massively important for giving negotiators the edge in contract discussions in a world in which the near-perfect shared cognition provided by AI overwhelms nearly all forms of intellectual advantage.

In fact what we are going to get is an overwhelming shift away from cognitive attacks in things like fraud (“they don’t know how this industry really works, they’re getting a bad deal here”) to knowledge-based attacks (see lemon markets) in which secrets and lies become the primary tools in play because all parties have access to equally competent cognition. The fundamental origins of contract disputes don’t change once you put AI in the mix ; differential readings of contracts are largely dealt with by AI, but these Five Nasty Surprises continue. In each of these cases discovering new information is what throws the contract into doubt, so the trick is to ensure the information is as complete as possible, that it is verifiable, and there is a financial consequence if something is wrong, which is what the Mattereum Asset Passport does in the blockchain part of the synergy. Once you have that, the contract is as solid as it possibly can be, and it is backed by a robust built-in dispute resolution layer. Should one of the Five Nasty Surprises manage to wiggle its way into the agreement, it can be resolved far more quickly and easily than most current trade disputes, which can drag on for years creating a drain on profit and morale.

So the Mattereum Asset Passport is an epistemologically sophisticated approach which prices the Five Nasty Surprises — if things are not as they are said to be, regardless of what the fundamental problem is which gives rise to an issue, the problem is handled from the perspective of the buyer of the assets (and the information about the assets) who does not care about what the nature of the problem is in many cases, they just want the ability to access restitution for the defect in their transaction. Deliberate fraud may require later prosecution, but the first step should always be to make buyers whole. The Mattereum Asset Passport, because it focusses on buyer protection through risk-on-data models, ensures transactional value in the widest possible range of circumstances. Errors, frauds, secrets, lies, and scientific discovery are all within scope for Mattereum.

Mattereum protects people from all of it.

All dressed up with no revenue

Right now there are four competing theses about where the the money is going to be made in AI.

• better decision making which will save or make money
• physical robot labour using AI to automate jobs
• generation of media or text on demand
• AI-accelerated discovery and invention in STEM

The unproven case is STEM discovery — better drugs faster, new mathematics, and huge software systems conjured in the blink of an eye one day — but right now that’s all in the future and if everybody is doing it that way, is there really going to be a competitive advantage in it?

Will it just be the new normal?

Startling, breathtaking, seemingly ludicrous amounts of money have been invested in AI, and investors want payback, but no one is really seeing any yet; like the blockchain, it is struggling to find the revenue case. How much more is a text editor worth if it has an AI button? How much less is a text editor worth if it has an AI button?

The jaw dropping sums of cash are being invested because AI is THE tech of the future, and the source of all the money in the economy of tomorrow. No-one in the mainstream is even questioning that. But it is almost certainly a bubble, at least it will be until and unless they find the revenue. But exactly where the money is, and quite when the future business model reveals itself, are questions that most still struggle to answer.

The hype was “buy AI, fire half your staff, reap the profit”, except it’s turning out not to work like that, because that’s not where the efficiencies lie, that’s not where the payback comes from. AI makes labour more efficient, but straight up replacement of workers with bots is not going to work the way some people think it will, any more than the industrial revolution did away with blacksmiths.

Blacksmithing is still going strong.

It’s the connection to the blockchain that will do it, and through that synergy’s ability to revolutionise transactions. Mattereum’s Asset Passport is the connection, the glue that allows the cognitive ability of AI to safely transact using the immutable data on the blockchain.

So there is an unproven bet on automating industrial scale STEM discovery, but there is a sure thing: fundamental efficiency. Right now the world is drowning in paperwork which could be automated with AI, and the resulting improvements in speed and efficiency would actually provide all the profit the AI industry could possibly need. The revenue potential from efficient real estate transactions alone is jaw dropping, as you will see. This may seem conservative, but the money is actually there with the AI systems of today, not tomorrow.

Likewise, the blockchain is still struggling to fulfil its promise. It is clear that the blockchain we have now became just memecoins, monkeys and rugpulls and continues to have a problem generating actual revenue because it was essentially a powerful technology looking for a use case, and that use case didn’t exist yet. The financials services guys like Blackrock are going to strangle everything which made the blockchain interesting on the way to mass adoption.

But at Mattereum, we could see what this use case could be, though, and it is improving the base technology of civilization, which is “the transaction”. Civilization has always been about trade. We could see that real world asset tokens were going to be a thing eventually, and the Asset Passport would be vital for enabling effective transactions by legally securing the physical asset to the virtual token. But it can’t just be about financial instruments: it has to be about using things, enjoying things, creating things, not just lending money against things. Financializtion is only a fraction of what the digital-to-physical interface must open up.

We also realised that AI was going to explode, and when it did, it had the potential to change everything, but we could see some of the limitations. If you want to use AI to carry out transactions involving physical objects in the real world, it has to know those physical objects exist, and are not clever digital simulacra designed to spoof the system. Asset Passports on the blockchain are a rail for AIs to verify the truth — this was the screw/screwdriver synergy the blockchain was waiting for, and more than that, AI would be a powerful tool in the preparation of Asset Passports. We built our blockchain lawtech with this in mind, and now its time has come; we have a tested and proven technology ready for the task of integrating AI into trade on a basis that the still-very-necessary lawyers love. It is optimised to use AI to gather information to be verified in the Asset Passport, and to easily provide AIs with the grip on real objects they will need.

We built Mattereum around transactions and contracts because we knew that contracts were going to continue to exist in almost all technological futures, robots, VR, AI, Blockchain, all of these things were going to wind up governed by contract, because a contract is just a formalized human understanding of an agreement. The contract, whatever it might get called, is a cultural invariant; Mattereum aims to make its formation and execution as frictionless as possible, whatever the technology used to enact it. This is not just a promise for the future, it is something that we can do now; we can do it on the blockchain, and we can synergise that with AI to make the system that will run the future of commerce. We can do it now and continue to make it work for the future. Once you have AI in the loop dealing with Asset Passports, contracts, and dispute resolution, it is kind of scale invariant; we could go through three, four, five generations of AI development, or more, and the fundamentals wouldn’t change, just scope, speed and capacity. Once aligned with AI, the tech doesn’t need repeated reworking to keep up. Mattereum is grounded in transactions, not fads.

Most tech startups are based on the idea of bringing about, or at least tailgating, some sort of human behavioral change. Some companies that bet on human behavioural change succeed — Spotify, for example. They bet on how we’d change our listening habits — but most of the companies that bet on human behavioral change fail — we’re all riding Segways, right? Mattereum has bet on human behaviour staying the same.

From time immemorial commerce and its predecessors have relied up on some form of contract to secure a transaction, whether it involves two illiterate Sumerian goat herders spitting on their hands then shaking to agree a sale, through to Romans testifying in court, and on to today’s vast armies of commercial lawyers negotiating a corporate buyout, or a software purchaser ticking a box to pretend they have read an endless scroll of T&Cs. We have assumed the contract and the formation of contract is going to remain unchanged, regardless of the technological substrate the contracts are formed using, and aimed to make our product a flexible and responsive technology that can accelerate contract formation, whatever the substrate used.How can you sell real estate online against deep fakes?

Protecting Real Estate Revenue from Deepfakes

Currently, the big challenge is fixing real estate — it’s the world’s largest asset class, but impossibly slow and difficult to transact. There are huge structural inefficiencies, and as a result, it drove the global economy into the ground. The 2008 financial crash was the result of the horrible inefficiencies in transacting real estate; it was triggered by problems with the mortgage market, and a key factor there was that it was impossible to tell who actually owned any specific mortgage after they had been bundled up and sold on multiple times. The problem was caused by the financialisation of the mortgages being digital, but the data about the mortgages themselves still being stuck in the analogue world, so the two got separated and as a result so much data vital for effective and safe transitions was just hidden from purchasers. This needs to change, real estate needs to be brought into the digital world.

In the minds of many economists, the best available technology to work on the problem of digitizing real estate is blockchain, and Mattereum has a solution that will work for that. An Asset Passport can bundle together all the scattered documentation that is needed for a real estate transaction, which, in some cases, dates back to the days when the documents were inscribed on animal skins, ensure they are verifiably legal, then use the blockchain to attach them to a transactable token that can carry the actual sale.

With a Mattereum Asset Passport every fact used to make the purchasing decision is insured to the value of that decision, so “does the building exist” is insured for full value, whereas “are the windows double glazed” might be a few percent of the value of the building. When things are structured this way, buyers don’t have to verify every fact, they only have to verify the integrity of the insurer, which makes things a whole lot easier, and all of this is still going to be far less expensive than the 6% fee for transacting real estate, which was typical in the US until recently

This means that however the real estate is sold on, the complete data about the property stays with it through every transaction; it makes cataclysmic dumpster fires like 2008 impossible, and it is so much simpler than the months-long process involving lawyers, land registries, banks, surveyors and everything else that you currently have to grind through to buy and sell real estate. There’s really no alternative for this system because of the Principal Agent Problem: any middle man who does not have skin in the game can be bribed to lie to the AI which the buyer is using to make a decision. This puts their skin in the game.

Full liability is the only pathway to the truth.

Now AI has come along, it takes that work and amplifies it by a factor of tens of thousands, because once you can get those transactions right using the blockchain, you can scale that understanding using AI. In the future, we think it’s inevitable that AI will basically remove all the friction grinding the gears of real estate transactions, evaporating the structural inefficiencies in the deployment of capital. AI can do this because it can make the production of verifiable information needed for the formation of contracts as reliable as industrial production of components. This not only solves the legacy problems real estate has in the digital age, it makes the real estate market fit for the future.

Building it for you Wholesale

Making housing an investment product has resulted in a crisis in home building, as scarcity pushes the price up. This results in millions of people being unable to get on the housing ladder and it is beginning to create real societal problems. Governments are starting to recognise this and are announcing ambitious home building programmes, but there is a considerable degree of scepticism as to whether they can meet their goals due to the shortage of skilled workers able to build houses, which, in the UK has been exacerbated by Brexit as that has led to a massive exit of eastern European workers with the relevant skills, whose presence, in turn, had meant that training for builders in the UK had been cut back, so now there’s a massive skills gap. However, just as it is clear that technology means that it is no longer sensible to continue transacting real estate in the old way, it also means that it is no longer sensible to keep building houses as if it was 1970. It is clear that the future is going to be robot construction — robots, one of those fundamental technologies we prepared for, along with AI and the blockchain.

There have already been successful trials of robots that can 3D print an entire house in less than 24 hours and this, as well as other robotic technologies, is going to be how the housing of the future will be built. No need for labourers who don’t exist, no need to spend months on construction. So, if building property is going to be that fast, the limiting factor is going to be the bureaucracy enabling it. If the old way of putting the relevant contracts in place to build, then sell, a robot built property persists, it is going to suck half the efficiency gains out of the process. To make robot construction work it needs the kind of contractual streamlining Asset Passports on the blockchain, working with AI can enable.

The goal state is to do industrial production of agreements in the same way they do industrial production of screws. And once you can do industrial production of ultra high reliability agreements, the world changes just as it did when we did mass production of physical products — the Industrialization of agreements is hugely powerful. The blockchain is a critical part of that, and is magnified by AI. Back in 2017 I wrote about the internet of agreements — we started with an internet of information, which became an internet of transactions, but now blockchain and AI can make it a true internet of agreements by optimally streamlining the contract process.

An AI/Blockchain contract is a smart contract that’s actually smart. They make it possible to use AI in the resolution of real contracts. Mattereum’s Asset Passport is an orchestration framework for cooperating and competing AI agents in trade. The network of contracts, such as those that govern real estate sales, is as reliable as the least reliable contract. But this has a wider application, at the center of any network of contracts, companies absorb the slack, which solves a whole different crisis, the prime contractor crisis, where prime contractors have not taken responsibility for integrating their supply chain resulting in a mess of small companies woven together with networks of defective contracts. You could just run a blockchain/AI combination right through that, and it would suck out all the mess that is caused by not having a prime contractor own the entire supply chain.

This is a “Coase’s Penguin” type thing — in 2002 Yochai Benkler talked about Linux by building on Ronald Coase’s seminal 1937 work, “The Nature of the Firm” and argued that the low physical capital and communication costs of the networked environment enable a third, distinct model of production that is often more efficient than either traditional firms or markets for information and cultural goods. The blockchain/AI combination makes this possible as a widespread business model, rather than a niche approach suitable for special cases, like open source software. More problems solved, more liquidity released, more profit — I could go on, sector by sector with ways the AI/blockchain synergy could revolutionize commerce and generate profit, it has that potential.

The Big Payoff — finally, revenue!

So, where is the money? The revenue that justified the investment in AI and the blockchain. Here it is: REAL ESTATE. Bricks and mortar and AI and blockchains in a seamless synergy.

The real estate ecosystem contributes roughly 11–13% to global GDP, or about $12–15 trillion annually and 3–5% of that consists of transactional friction. That transactional friction, at 5% of $15 trillion, amounts to $750 billion annually. Total investment in AI from 2020 to 2024 was approximately $570 billion.

There’s the payback. Eliminating the friction in real estate transactions using AI generates all the money needed to pay back all the investment in AI, plus turn a generous profit. Never mind chatbots, image generators, whatever — THAT. Just sorting out the contracts, and just in real estate.

Blockchain and AI-powered real estate transactions will seem like magic.

Drones and robots will inspect buildings. Realtors will search tens of millions of listings for you, using their expertise to help you understand what you need and want, and leaving the searching to machines. What Grok, ChatGPT, DeepSeek, Gemini, and Claude have done for business development and software engineering, a new generation of AI systems will do for erecting roofs and laying down foundations. It’s not hard to find the training data: town halls all over the world have centuries of blueprints. The world is filled with buildings to study. Projects will be financed in hours not years. Building permits will be issued in milliseconds not months. Every single transformation here is accessible with current generation AI models: this is the industrial transformation moment.

It will seem like magic. And it will generate a half a trillion dollars a year in revenue.

Mattereum has the technology, has tapped into this market, has meaningful revenue, and is on the pathway to rapid scaling.

Join us in this future. Reach out to join the journey.

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HALF A TRILLION DOLLARS A YEAR OF MAGIC: BLOCKCHAIN, AI, AND THE FUTURE OF THE BUILT ENVIRONMENT was originally published in Mattereum - Humanizing the Singularity on Medium, where people are continuing the conversation by highlighting and responding to this story.

TOKENS, AI, REAL ESTATE, AND THE FUTURE OF FINANCE

Artificial inflation of real estate prices for decades caused the global financial crisis.

We propose converting the global system from a debt-backed to an equity-backed model to solve it.

We propose using AI to manage the diligence work, and using the blockchain to handle the share registers and other obligations.

By Vinay Gupta (CEO Mattereum)
with economics and policy support from Matthew Latham of Bradshaw Advisory
and art and capitalism analysis from A.P. Clarke

THE BAR CODE STARTED IT

Back when I was in primary school in the 1970s, they suddenly started teaching us binary arithmetic; why?

Well, because they could see that computers were a coming thing and, of course, we’d all have to know binary to program them. So, The Digital has been a rolling wave for pretty much all my life — that was an early ripple, but it continued to build relentlessly, and when it truly started surging forwards in the 1990s, it began to transform everything in its path. Some things it washed away entirely, some things floated on it, but everywhere it went, digital technology transformed things. Sometimes the result is amazing, sometimes it is disastrous.

The wave was sometimes visible, but sometimes invisible. You could see barcodes arrive, and replace price stickers.

I’m just a bit too young to remember when UK money was pounds, shillings and pence. In 1970 there were two hundred and forty pence to the pound.

Through the 1970s and 1980s the introduction of barcodes on goods was a fundamental change in retail, not just because it changed how prices were communicated in stores, but because it enabled a flow of realtime information about the sale of goods to the central computer systems managing logistics and money in the big store’s supply chain.

Before the bar code, every store used to put the price on every object with a little sticker gun. Changing prices meant redoing all the stickers. Pricing was analogue.

In many ways decimalization and barcoding marked the end of the British medieval period. We still buy and sell real estate pretty much the same way we did in 1970.

The sword has two edges

When you get digitization wrong, the downsides tend to be much larger than the upsides. It’s all very well to “move fast and break things” but the hard work is in replacing the broken thing with something that works better. It’s not a given that better systems will emerge by smashing up the old order, but the digital pioneers were young, and it seems obvious to young people that literally anything would be better than the old people’s systems. This is particularly true in America, which, being founded by revolutionaries, lacks a truly conservative tradition: in America, what is conserved, what people have nostalgia for, is revolution itself.

That makes change a constant, and this is both America’s greatest strength, and weakness. The only thing you can get people interested in is a revolution. Nobody cares about incrementally improving business-as-usual. Everybody acts like they have nothing to lose at all times.

This winner-takes-all nothing-held-back attitude exemplified by “move fast and break things” has become the house style of the digitization.

But as a result a lot of things are broken these days.

Jonathan Taplin - Move Fast and Break Things

Wikipedia turned out pretty well

You can get a decent enough answer for most purposes from Wikipedia, it’s free, it’s community generated, there’s no ads, it doesn’t enshittify (yet), and you do not need to spend a fortune on a shelf full of instantly out of date paper encyclopedias. Most people would agree this is “digitization done right.”

Spotify, not so much; it wrecked musicians livelihoods, turned music listening into a coercive hellscape of ‘curated’ playlists, and is on course to overwhelm actual human created music with AI produced digital soundalike slop that will do its best to kill imaginative new leaps in music — no AI without centuries of history and culture build up in its digital soul could come up with anything like the extraordinary stuff Uganda’s Nyegge Nyegge Tapes label finds for example — and you pay for it or get hosed with ads. It was, after all, always intended to be an advertising platform that tempted audiences in with streamed music.

Nobody ever stopped to ask how the musicians were doing.

Of course for the listeners — the consumers of music-content-product — the experience was initially utopian. People used to talk about the celestial jukebox, the everything-machine, and for a while $9.99 a month got you that. The first phase was utopian, for everybody except the musicians, the creators of music: they had a better financial deal when they got their own CDs pressed and sold them at shows. Seriously, musicians look back at that time as the good old days. Digitization went badly wrong for music.

How Spotify is stealing from small indie artists, why it matters, and what to do about it

It’s not just the software that can be disastrous; take massive data centres, not only do they cover vast areas and consume ludicrous amounts of energy, they are extremely vulnerable to disaster. The Korean government just lost the best part of a petabyte of data when one went up in smoke — the backup was in the same place it seems.

Then there’s a contagious Bluetooth hack of humanoid robots that has just come to light. You can infect one of the robots, and then over Bluetooth, it can infect the other robots, until you have a swarm of compromised humanoid robots, and Elon Musk says he’s going to produce something like 500,000 of these things.

We always thought Skynet would be some sinister defence company AI, but it turns out that basically it’s just going to be 4Chan’s version of ChatGPT — and it’s not like there isn’t plenty of dodgy, abrasive internet culture in the training data already!

This is the digital crisis, it inevitably hits field after field, but whether what emerges at the end is a winner or a disaster is completely unpredictable.

Will it lead to a Wikipedia, or a Spotify, something that’s just sort of OK, like Netflix, or something deeply weird and sinister like those hacked robots. Did Linux save the world? Will it?

Why is there such a range in outcomes over a process whose arrival is so predictable? That is because the Powers-That-Be that might steer the transition, that could come up with an adequate response, the nation states, are really poor at digital. Nation States move too slowly, they fundamentally fail to understand the digital, and their mechanisms just haven’t caught up; they just suck at digital at a very primordial level, so the result of any digital crisis requiring state intervention is a worse crisis.

That’s not to say that any of the possible alternatives to nation states show any sign of doing this better — that’s part of the problem.

Whoever is doing the digitizing during the critical period for each industry has outsized freedom to shape how the digitization process plays out.

4chan faces UK ban after refusing to pay 'stupid' fine

Move fast and break democracy

Eventually “move fast and break things” took over in California and beyond, and crypto (the political faction, the industry, the ideology!) identified the fastest moving object in the political space (Trump-style MAGA Republicanism) and backed it to the hilt.

The American Libertarian branch of the crypto world is now trying to build out the rest of their new political model without a real grasp of how politics worked before they got interested in it. The crypto SuperPACs and associated movements threw money at electing a team who would accommodate them, in the process destroying the old American political mode without, perhaps, much concern about what else they might do once in power.

There’s a whole bunch of “break things phase” activity emerging from this right now.

Unprecedented Big Money Surge for Super PAC Tied to Trump

The “break things” part of “move fast and break things” has a very constrained downside in a corporation. Governments are a lot more dangerous to tinker with.

The Silicon Valley venture capital ecosystem itself is a relic. It is itself a legacy system. Dating back to the 1950s American boom times, Silicon Valley is having an increasingly hard time generating revenue, and today its insularity and short sightedness are legendary. There is a lot of need for innovation, and there’s no good way to fund most of it. Keeping innovation running needs a new generation of financial instruments (remember the 2018 ICO craze?) but instead we’re stuck with Series funding models.

Funding the future is a now a legacy industry.

Series A, B, C, D, and E Funding: How It Works

It still isn’t fully appreciated that today’s political crisis, to a significant extent, is because the Silicon Valley could not integrate into the old American political mode. For decades Silicon Valley struggled to find a voice in Washington, or to figure out whether the right wing or the left wing was its natural home. Meanwhile life got worse and worse in California because of a set of frozen political conflicts and bad compromises nobody seemed to be able to fix. The situation slowly escalated, but the problem in Silicon Valley was always real estate.

How Proposition 13 Broke California Housing Politics

Digital real estate is a huge global gamble

The digital crisis is just about to collide with one of society’s other major crises — the housing crisis.

1. We have problems, globally, with real estate.
2. We don’t seem to be able to build enough of it,
3. nobody seems to be able to afford it, largely because
4. it’s being used as an asset class by finance
5. instead of being treated as a basic human need.

Real estate availability and real estate bubbles are horrendous problems.

The U.S. Financial Crisis

Now the hedge funds are moving in to further financialize the sector at the same time as people seem not to be able to buy enough housing to have kids in.

This has been steadily getting worse since Thatcher and Reagan in the late 70s/early 80s. Once, one person in work could comfortably buy a house and support a family, then it became necessary for two people to work to do that, now it’s slipping beyond the grasp of even two people, and renting is no cheaper; renters are just people who haven’t got a deposit together for a mortgage, so are paying someone else’s and coming out the end with nothing to show for it. It’s a mess, and then we’re going to come along and we’re going to digitize real estate. What could possibly go wrong?

Well, if we don’t deal with this as being an aspect of a much larger crisis, we will be rolling the dice on whether we like the outcome we get from digitization of real estate. Things are really bad already, and bad digitization could make them so much worse. But, as is the nature of the digital crisis, it could also make them better, and it is up to us, while things are still up in the air, to make sure that this is what happens.

The initial skirmishes around digitization of real estate have mostly been messy: the poster children are Airbnb and Booking, both of which enjoy near-monopoly status and externalize a range of costs onto the general public, while usually offering seamless convenience to renters and guests. But when things go wrong and an apartment gets trashed or a hotel is severely substandard, often people are left out in the cold dealing with a corporation which is so large it might as well be a government and this is, indeed, usually how the Nation State as an institution has handled digital.

Corporations the size of governments negotiate using mechanisms that look more like international treaties than contracts, and they increasingly wield powers previously reserved to the State itself. It’s not a great way to handle a customer service dispute on an apartment.

Neoreaction (NRx) and all the rest of it simply want to ratify this arrangement and create a permanent digital aristocracy as a layer above the democracy of the (post-)industrial nation states: the directors and owners of corporations treated as above the law.

Inside the New Right, Where Peter Thiel Is Placing His Biggest Bets

Economic stratification and political complexity

One reason we aren’t dealing adequately with these crises is that the very existence of many of them is buried by an increase in the variance of outcomes. It used to be that people operated within a fairly narrow bandwidth. The standard deviation of your life expectations was relatively narrow, barring things like wars. Now, what we have is this incredibly broad bimodal distribution, trimodal distribution. A chunk of people manage to stay in the average, a tiny number of people wind up as billionaires, and then maybe 20% of the society gets shoved into various kinds of gutters. In America, it’s medical bankruptcy, it’s homelessness, it’s the opioid epidemic, it’s being abducted by ICE, those kinds of things.

What we’ve done is create a much wider range of possible outcomes, and a lot of those outcomes are bad, but the average still looks kind of acceptable — the people at the top end of that spectrum are throwing off the averages for the entire rest of the thing.

Ten facts about wealth inequality in the USA - LSE Inequalities

In fact, generally speaking, on the streets things repeatedly approach the point of revolution as various groups boil over. If they all boil over at the same time, that’s it, game over, new regime.

We’re in a position where we’ve managed to create a much more free society with a much wider range of possible outcomes, however, the bad outcomes are very severe and often masked by the glitzy media circus around the people enjoying the good outcomes. Good outcomes are being disproportionately controlled by a tiny politically dangerous minority at the top, but as these are the ones making the rules, trying to correct the balance is super difficult.

Democracy as we knew it was rooted in economic democracy, and nothing is further from economic democracy than robots, AI, and massive underemployment. Political democracy without economic democracy is unstable and only gives the lucky rich short term benefits; they are gambling on being able to constantly surf the instabilities to keep ahead of the game, continuing to reap those benefits while palming the externalities off on everyone else. But that can’t be done; eventually someone gets something wrong and the whole lot hits the wall in financial crashes, riot, revolution, and no one gets a good outcome. It all ends up like Brazil if you’re lucky and Haiti if you’re not.

The combination of extreme wealth gaps and democracy cannot be stabilized, and increasingly the rich are looking at democracy as a problem to be solved, rather than the solution it once was. I cannot tell you how bad this is.

Yet the benefits of technology are all around us, increasingly so. Democracy tends towards the constant redistribution of those benefits through taxation-and-subsidy. To fight against being redistributed, the billionaires are rapidly moving towards a post-democratic model of political power. The general human need for access to a safe and stable future seems to be less and less a stated goal for any political faction. This is getting messy.

Today, middle of the road democratic redistribution sounds like communism, but it’s not; it just sounds like that because the current version of capitalism is so distorted and out of whack. American capitalism used to function much more like Scandinavian capitalism, a version of capitalism that gives everyone a reasonable bit of the pie, with a strong focus on social cohesion. Within that model, the slice may vary considerably in size, but it should allow even those at the lower end safe and dignified lives. Weirdly enough the only large country running a successful 1950s/1960s “rapid economic growth with reasonable redistribution of wealth” model of capitalism today is China.

Breakneck

Fractocrises and magic bullets

In 2016 there was a little dog with a cup of coffee who reflected back the feeeling the world had gone out of control and nobody cared.

In 2016. Sixteen. No covid. Not much AI. Little war. But still the pressure.

Understandably some very smart people are pursuing the concept of polycrisis as a response to the many arms of chaos.

Deal with the crises in silos and this mess is the result.

The impulse towards polycrisis as a model is understandable, but it’s a path we know leads to a very particular kind of nowhere. It leads to Powerpoint.

In truth, crises are fractal. They are self-similar across levels. The chains of cause-and-effect which spider across the policy landscape in impenetrable webs are produced by a relatively small number of repeating patterns.

“Follow the money”, for example, almost always cuts through polycrisis and replaces the complexity of the situation with a small number of actors who are above the law.

To use a medical analogy, a patient can present with a devastating array of systemic failures driven by a single root cause. Consider someone suffering from dehydration — blood pressure is way down, kidneys are failing, maybe 40 different systems are going seriously wrong. Treat them individually and the patient will just die.

Step back and realise “Oh, this patient is dehydrated!”, give them water and rehydration salts and appropriate care and all the problems are solved at once.

Or maybe it’s reintroducing wolves to Yellowstone Park; suddenly the rivers work better, there are more trees, insect pests decline, because one big key change ramifies through the system and brings about a whole load of unanticipated benefits downstream. Systems have systemic health. Systems also have systemic decline. But the complex systems / “polycrisis” analysts focus entirely on how failing systems interact to produce faster failure in other failing systems, effectively documenting decline, and carry around phrases like “there is no magic bullet.”

There is. The magic bullet for dehydration is water.

Finding the magic bullets is medicine; documenting systemic collapses is merely biology.

REHYDRATING THE AMERICAN DREAM

The dollar is a dead man walking — there is no way to stabilise the dollar in the current climate. It is holed below the waterline but the general public has only the very earliest awareness of this problem today. By the time they all know there will be no more dollar. Perhaps the entire fiat system is in terminal decline as a result: if the dollar hyperinflates, or dies in some other way, will it take the Pound and the Euro and the Yen with it? Who could have foreseen this?

Frankly, in 2008, following the Great Financial Crisis, everybody knew.

There is a long term macro trend of fiat devaluation. There is also the acute fallout of the 2008 catastrophe. We have a fundamental problem: the 1971 adoption of the fiat currency system (over the gold standard) is not working. The dysfunction of the fiat system detonated in 2008. We have now had 17 years of negotiations with the facts of the matter, but so far, no solutions.

Well, other than this one…

All the fiat economies are carrying tons of debt, crazy unsustainable amounts of debt, both personal and national. It could well be that a lot of smart people are thinking that a “great reset” of some kind would solve a lot of problems simultaneously.

The Jubilee Report: A Blueprint for Tackling the Debt and Development Crises and Creating the Financial Foundations for a Sustainable People-Centered Global Economy

The nature of that “great reset” is going to determine whether your children live as slaves, or live at all.

So the global approach to currency needs overhauling as part of a more general effort to make the political economy stabilize in an age of exponential change.

It is not the first time that it has been done even within living memory.

Bowie released “The Man Who Sold The World” while the dollar was still backed by physical gold. This is not ancient history. It’s not at all irrational to think that 6000 year old human norms about handing over shiny bits of metal for food might need to be updated for the world we are in today. But it’s also not too late to adjust our models and fine-tune the experiment.

Globally issued non-state fiat, like Bitcoin, is just not going to get you the society that you want, unless the society you want is an aristocratic oligarchy. Bitcoin is just a different kind of fiat — money that only exists because someone says it’s money and enough people go along with it, rather than money based on something that has intrinsic value itself. It has the same problem as fiat currency has: there is no way to accurately vary the amount of money to meet the demand for money to keep the price of money stable. Purchasing power is always going to be unpredictable and that makes long term economic forecasting difficult for workers and governments alike.

Governments print too much. Bitcoin prints too little, particularly this late in the Halving Cycle.

Understanding the Bitcoin Halving Cycle and Its Impact on 2025 Market Trends

The problem of purchasing power fluctuations causes for estimating long term infrastructure project economics has huge impacts too: if you can’t accurately predict the future, you can’t finance infrastructure. You can’t plan for pensions. The great wheel of civilization grinds to a halt as short-termism eats the seed corn of society. Nobody wants to make a 30 year bet because of robots and AI and all the rest, and so we wind up ruled quarter by quarter with occasional 4 year elections.

Not dollars, not Bitcoin

The debates about what money should be are not new.

Broadly, there are three models for currency

(1) government fiat/national fiat — fine in principle but, in practice, in nearly all highly democratic societies the governments wind up inflating away their own currencies over time

(2) global fiat issued on blockchains — Ethereum, Bitcoin, all the rest of those things

(3) resource-backed currencies — conventionally that means gold but it can also apply to things like Timebanking and various mutual credit systems

Gold is already massively liquid. You cannot solve a global crisis by making gold 40 times more valuable than it currently is because it becomes the backing for all currencies again. Gold is also very unequally distributed: Asian women famously collect the stuff in the form of jewellery and a shift to a new gold standard could easily make India one of the wealthiest countries in the world again, women first. Much as this sounds like a delightful outcome, it’s hard to imagine a new economic order ruled by now-very-wealthy-indeed middle class Indian housewives who had a couple of generations to build up a solid pile of bangles.

This, by the way, is the same argument against hyperbitcoinization — being on the Silk Road in 2011 and buying illegal substances using bitcoin is not the same thing as being good at productive business or being a skilled capital allocator: windfalls based on a social choice about currency systems are not a sensible way to allocate wealth, although it does often happen.

Hyperbitcoinization Explained - Bitcoin Magazine

You can argue that bitcoin mining requires a ton of expertise and technological capacity, and this is worthy economic reward, but there is a fundamental limit to how many kilograms of gold you can rationally expect to pull out of a data center running 15 year old open source software.

Similarly, the areas which were geographically blessed (or is that cursed?) by gold would wind up with a huge economic uplift. It becomes a question of geological roulette whether you have gold or not, and unlike the coal and oil and iron and uranium lotteries, nobody can build anything using gold as an energy source or a tool. Gold is just money. It’s like an inheritance.

Resource curse - Wikipedia

So what’s the alternative? Bitcoin scarcity, gold scarcity, these are all models in which early owners of the asset do very well when the asset class is selected for the backing of the new system. Needless to say those asset owners are locked in a very significant geostrategic power struggle for the right to define the next system of the world. They are all bastards.

Strange women lying in ponds distributing swords is no basis for a system of government...

But what if we move to something that is genuinely, fundamentally useful? Well, what about land? You’re much more likely to get a world that works if you rebase the global currencies on real estate in a way that causes homes to get built, than if you rebase the world’s currencies on non-state fiat.

Both sides of this equation must balance. If we simply lock the amount of real estate in the game, then (figure out how to) use it as currency we wind up with another inflexible monetary supply problem. Might as well use Bitcoin or Gold. We’ve been down this track: we did not like it, and in 1971 we changed course permanently.

Real estate could be “the new gold” but real estate has flexible supply because you can always build more housing.

If the law permits.

And if we can solve that problem, the incentives align in a new way: building housing increases the money supply. If house prices are rising too fast, build more housing.

Bryan's Cross of Gold and the Partisan Battle over Economic Policy | Miller Center

Artificially scarce real estate is the gold of today

We’ve been manipulating real estate prices for a few generations.

The data is screamingly clear, and that’s 100% evidence of pervasive market manipulation: housing is not hard to physically build, but bureaucratically there’s been a massive concerted effort to keep the stuff expensive by bureaucratic limitations on supply. There are entire nation states dedicated to this cause.

The exceptions to this rule look like revolutionary actions.

Consider Austin, Texas which saw its real economic growth and potential status as The Next Great Californian City threatened by a San Francisco style house price explosion. Austin responded with a massive building wave, and managed to rapidly stabilize house prices at a more sustainable level.

Some reports say that >50% of Silicon Valley investor money eventually winds up in the pockets of landlords.

Peter Thiel: Majority of capital poured into SV startups goes to 'urban slumlords'

The way out is to build housing, and a lot of it.

But not like this.

Digital finance has to build more real estate to win

At the root of everything is that the digitization of real estate has to build more real estate. If the next system does not work for average people to get them a better outcome than the current system, there is going to be real trouble: state failures or the violent end of capitalism.

First and above all, this means we need to build more real estate.

Building has been artificially restricted because to make it work as an investment that increases in value, there needs to be scarcity; if you build more its investment value goes down, but its utility value increases.

YIMBY - Wikipedia

One way to digitize real estate is to create currencies backed by real estate, but the logical outcome of this is to make real estate as scarce as possible to protect the value of the currency, which is a disaster for the people who actually need to live somewhere. It would be like a society where mining gold is illegal because the value of the gold supply has to be protected, except we are doing this for homes. We are here now, and we could make this disaster worse.

In truth, if we take that path, we are fucked beyond all human belief. We will have literally immanentized the eschaton. You basically wind up with the economic siege of the young by the old, and that is a powder keg waiting to blow. State failures and violent revolutions.

The 2008 crisis was triggered by over-valuing real estate (underpricing the risk, to be precise) on gigantic over-simplified financial instruments like mortgage-backed securities, literally gigantic bundles of mortgages with a fake estimate about how many of the people taking out those mortgages could afford them in the long run. The global economic slowdown triggered by the US-led invasion of Afghanistan and Iraq (don’t even get me started) hit the mortgage payers, and the risk concentrated in markets like “subprime mortgages” and the credit default swaps which were being used to hedge those (and other) risks.

Credit default swap - Wikipedia

The digital crisis, when it hits real estate, could make 2008 look like the boom of the early 90s. However we choose to tokenize real estate, it has to result in more homes getting built.

However we choose to tokenize real estate, it has to result in more homes getting built.

You cannot use real estate as the backend for stablecoins, then limit the supply of real estate in a way that causes prices to continually go up. That paradigm is what has caused the current real estate crisis. It’s been destroying our societies in America and Europe for decades, so it’s not going to solve the crisis it has caused.

This is largely downwind of Thatcher and Reagan and financial deregulation on one hand, paired with promises to control inflation over the long run (we’re talking decades). This was the core promise made by the Conservatives: inflation will stay low forever. We will not print money.

Once that promise was in place it was possible to have low interest rates and long mortgages, meaning the working class could afford to buy housing. They called this model the Ownership Society.

Ownership society - Wikipedia

The ownership society (and associated models) was an attempt to change the incentives for poor voters so they would not use democracy to take control of the government and vote money from the rich into their own pockets.

What we’ve done is we’ve basically bribed an entire generation (the boomers) with that model, and now we’re at the point where they have no grandchildren and the entire thing is collapsing because housing is a much worse kind of bitcoin than bitcoin. Expensive bitcoin makes bitcoin hard to buy. Expensive housing devastates entire societies. And that’s where we are today.

The solution to all of these ills is to solve these crises at a fundamental level. The patient is dehydrated. The patient needs water. Affordable housing.

This is why you’ve got to focus on outcomes for average people: in any crisis you can find a minority of people who are thriving. Those people are useless for diagnosing the cause of the crisis. You have to look at the losers to understand why the system is broken.

The rent is too damn high.

The patient needs water not antibiotics

If we fix the housing part of this digitization crisis correctly, the results are going to be amazing. That could be the one big change that propagates through the entire financial system and brings back the balance.

Essentially, what works is not backing a currency with real estate, then manipulating the real estate supply to prop it up. What works, we believe, is being able to use land directly as a kind of currency. This is not in the current sense of taking out a loan with the land as collateral, but instead using it directly as money without ever having to dip into any kind of fiat; no need to turn anything into dollars to be able to trade things. Why would I pay interest on a loan against my collateral if I can simply pay for something using my collateral directly?

If we digitize real estate properly, the reward is that we could potentially use tokenized real estate to stabilize the financial system. Regulatory friction is keeping real estate, by far the world’s largest asset class, illiquid in a world which desperately needs liquidity. But there is also a very hard problem in automating the valuation of real estate, and that is going to need AI.

When something is digitized it is inevitably an approximation, and the consequences of that approximation are much larger in some areas than others. With real estate, when we buy and sell we’re constantly in a position where we are dealing with the gap between the written documentation of the real estate and the actual value of the asset. As a result, you wind up with another kind of digitization crisis, one caused by the gap between the digital representation of the object and the object itself.

Using current systems, the liability pathways attached to misleading information in a data set being used to value assets would normally be revealed during legal discovery. If the problem is worth less than tens of millions it’s never going to be found out. If the problem is worth tens or hundreds of billions, it’s now too late. A lot slips through the gaps, historically speaking. And this is only going to get worse now that sellers have started to fake listings using AI.

• Realtors Are Using AI Images of Homes They're Selling. Comparing Them to the Real Thing Will Make You Mad as Hell
• Real estate listing gaffe exposes widespread use of AI in Australian industry - and potential risks

This information-valuation-risk nexus creates friction; to get real estate digitization to work we need to eradicate that friction, and keep fake listings out of the system. This challenge is only going to get harder.

Total Value of Global Real Estate: Property remains the world's biggest store of wealth | Savills Impacts

Real estate is a safer fix for the currency crisis

“Without revolution” is a feature, not a bug.

Vitally, unlike gold or bitcoin, the distribution of land and real estate ownership is close to the current estimates of people’s wealth: a shift to a real estate based economic model would not have the same gigantic and disruptive impacts as moving to either gold or bitcoin or both. There is enough value there too: $400 trillion dollars of real estate, versus $30 trillion of gold or only $38 trillion of US national debt. Global GDP is a bit over $100 trillion.

There is enough real estate, correctly deployed, to create a stable global medium of exchange.

The valuation problem has meant that previously the transactional costs of pricing real estate as collateral were insane. Instead of doing the hard work, pricing the real estate, financial institutions priced the mortgages on the real estate using simplistic models. The 2008-era financial system simply treated the mortgage as a promise to pay, without evaluating whether the person who was supposed to pay had a job, or if anybody was willing to buy the underlying asset which was meant to be backing the mortgage. A thing is worth what you can sell it for!

Shocking Headlines of the 2008 Financial Crisis - CLIPPING CHAINS

You would think somebody was minding the store, but you only need to look at the post-2008 shambles to realize not only is there nobody minding the store, the store itself burned down some time ago. In fact the global financial system is a system in name only: it’s more like a hybrid of a memecoin economy, a Schelling point, a set of real economic flows of oil and machine tools and microprocessors, and big old books of nuclear strategy and doctrine. The globa “system” is a bunch of bolted together game boards with innumerable weird pieces held together by massive external pressures, gradually collapsing because the stress points between different complex systems are beyond human comprehension. Environmental economics, for example. Or the energy policy / national security interface. AI and everything. The complexity overwhelms understanding and the system degrades.

It does not have to be this way.

When you have AI to price complex collateral like real estate (or running businesses), you can do things with that collateral that you couldn’t do previously. Of course that AI system needs trustworthy inputs. If the information coming into the system is factual, and the AI is an objective analyst, various parties can use their own AI systems to do the pricing without human intervention, so the trade friction plummets. Remember too these are competitive systems: players with better AI pricing models will beat out players with less effective price estimation, and that continuous competition will keep the markets honest, at least for a while.

Mattereum Asset Passports can provide the trustworthy inputs, again based on an extremely competitive model to price the risk of bad information getting into the Mattereum Asset Passport which is being used by the AI system to price the asset. The economic model we use was built from the ground up to price every substantial asset in the world even in an environment with the pervasive use of AI systems to manufacture fake documents and perpetrate fraud. We literally built it for these times, but we started in 2017. That’s futurism for you!

The economic mechanism of the Mattereum Asset Passport is a thing of beauty. The way that it works is that data about an asset is broken up into a series of claims. For example, for a gold bar, weight and purity and provenance and vaulting and delivery details and likely enough to price the bar. For an apartment there might be 70 claims including video walk throughs of the space and third party insurances covering issues like title or flood insurance. Every piece of information in the portfolio is tied to a competitively-priced warranty: buyers will rationally select the least expensive adaquate warranty on each piece of data. This keeps warranty prices down. This process is a strain with humans in the loop for every single decision, but in an agentic AI economy this competitive “Product Information Market” model is by far the best way of arriving at a stable on-chain truth about matters of objective fact.

It’s not that the system drives out error: it does, but the point is that it accurately prices the risk of error which is a much more fundamental economic process. This is a subtle point.

Bringing Truth to Market with Trust Communities & Product Information Markets

The combination of AI to commit real estate fraud and Zcash and similar technologies to launder the money stolen in those frauds is going to be unstoppable without really good, competitive models for pricing and then eliminating risk on transactions. The alternatives are pretty unthinkable.

In this new model, if I come to you with a token that says, based on the Mattereum Asset Passport data, this property is worth $380,000. Then you can say I will pay you 20% of this property in return for a car, there’s the transaction. You take 20% of a piece of real estate, I take an SUV. Maybe you can require me to buy back a chunk of that equity every month (a put option). Maybe the equity is pulled into an enormous sovereign wealth fund type apparatus which uses the pool to back standard stable tokens backed by fractions of all the real estate in the country. The story may begin with correctly priced collateral, but it does not end with correctly priced collateral. This is the anchor but it is only a part of a system.

If we get it right — and it’s a lot of moving parts — we could get out of the awful shadow of not only 2008’s financial crisis, but the calamitous changes to the global system which emerged from 1971.

WTF Happened in 1971?

The pragmatics of making real estate liquid

As long as you’ve got the ability to do relative pricing based on AI analysis, you don’t need to convert everything into currency to use it in trade. If you have an AI that can do the relative valuations, including risk and uncertainty, you can reach a position where you don’t have to use fiat money to make a fair exchange between different items, like land and cars, or apartments and antique furniture, or factories and farms; there are a whole set of AI-based value-estimation mechanisms that can be used for doing that and produce a fair outcome.

This cuts down or eliminates the valuation problems which can be caused by any kind of fiat — be it government fiat like the dollar, or private fiat like bitcoin — making it possible to operate on tokenized land — tokens based on an asset that is inherently dramatically more stable and inherently non-volatile. Solid assets back transactions. Closer to gold, but more widely distributed.

It’s a big story. But at its simplest what if we just said… “look, this is a global currency crisis. And the reason we’re in that crisis is artificial inflation. Real estate prices. Take the inflated real estate and the debt associated with the real estate transform it into equity, you know, debt to equity transformation…” and we restart the game on a sounder basis.

Who can follow along with that tune?

If you tokenize half, or even a third, of the real estate, what that provides is a staggeringly enormous pool of assets which move from being illiquid to liquid and that liquidity — widely distributed in the hands of ordinary people by virtue of them already owning these properties — then bails out the rest of the system. The conversion of mortgage debt into shared ownership arrangements, as mortgage lenders take equity rather than facing huge waves of defaults (again), balances the books without requiring huge government bailouts and money printing as in 2008. Homeowners do not hit the sheer logistical nightmares of moving house (particularly in old age) nor do they have to borrow money from lenders by remortgaging, creating more debt.

Rather than attaching debt to the real estate, we simply add a cap table to the real estate as if it was a tiny little company, and then let the owners sell or exchange some of that equity for whatever they want.

It’s a relatively small change to established norms, with massive, outsized benefits.

The key benefit of this approach is precisely that it is non-revolutionary. Compare the social stresses between this approach and doing that rescue process by massively pumping the price of (say) Bitcoin. In the hyperbitcoinization model you wind up with massive, massive, massive class war because you have people that were cryptocurrency nerds who are now worth half a trillion. You can’t have that kind of transfer of power without the system trying to engineer around it. Same thing happens with gold at $38,000 an ounce. The shift in wealth distribution is too violent for society to survive the transitional processes.

But making real estate truly liquid gives the economy the flexibility it desperately needs, probably without wrecking the world in the process.

Turning real estate debt into real estate equity and then making the equity tradable is not a new trick in finance: large scale real estate finance projects do things like this all the time. We’re just using established techniques from corporate finance at a much smaller scale, on a house-by-house basis, to safely manage the otherwise unmanageable real estate bubble. If every piece of real estate in America had the ability to do tokenized equity release built into the title deeds, America would not have solvency problems.

Pricing debt which does not default is relatively easy and prior to 2008 the global system sought stability by pricing debt as if it would not default. This looks like a joke now. But pricing defaults on debt is very very hard because the global economy is a just a part of a much larger unitary interlinked system and factors from beyond the view of spreadsheets can cause the world to move: covid, most recently. Such correlated risks change everything and are inherently unpredictable. Debt-based economies carry such risks poorly. Equity is a much better instrument for handling risk, but we have over-restricted its use, and are paying the price (literally) for this societal-scale error of judgement.

Debt cannot do what equity can, and we have too much debt and not enough equity.

Pricing complex and diverse assets like real estate is orders of magnitude harder than pricing good debt. Fortunately we now have the computer.

Flipping us from a debt world to an equity world needs a competitive AI environment to value the assets, and the blockchain to make issuing and transferring equity in those assets manageable.

That’s what’s needed to start clearing up the gridlocked debt obligation nightmare.

It’s not that hard to imagine, if you could tokenize one house, you could tokenize all of them. If you think of it as the debt to equity transformation for all of the mortgage debt, and then you pull the mortgage debt back out of the American system because you turn it into equity and then you allocate it to the banks, you could actually make America liquid again much faster.

It is an extreme manoeuvre, but the question is, as always, “compared to what?”

At the end of that we’d be left with a very different real estate ownership model, more like the Australian strata title or English Commonhold model. In both of these instances, aspects of a real estate title deed are split between multiple owners (the “freehold” is fractional) forming what amounts to an implicit corporate structure within every real estate title deed.

Imagine, that, but scaled.

• Strata title - Wikipedia
• Commonhold - Wikipedia

So practical government fought dirty for years

Business is pretty good at change once government gets out of the way.

Once tokenized equity is clearly regulated in America, business will figure out real estate tokenization very fast. We could see 5,000 companies in America that are capable of doing real estate tokenization five years after the SEC says it’s okay to do it.

Business will create competing industrial machines that will effect the transformation, and get huge numbers of people out of the debt. Shared equity arrangements for housing could rebalance the economy without crashing society. The speed at which society can get the assets on chain is equal to how quickly finance can satisfactorily document them and fractionalize them.

What is a plausible documentation standard for a real world asset on chain that you could use an AI system to create? That’s a Mattereum Asset Passport.

Mattereum aims to get real estate through the digitization crisis in a healthy and productive way. Specifically, a decentralized, networked way which is kept honest by ruthless competition to honestly price risk in fair and free (AI powered) markets.

A business model which is the best of capitalism.

The alternatives are not attractive.

But there is reason for hope.

Once you tell the Americans what the rules are, the Americans will go there and do it. The only way that the SEC could hold back mass adoption of crypto was by refusing to tell people the rules. It doesn’t matter how onerous the regulatory burden was, if the SEC had told people the rules, they would have crawled up that regulatory tree a branch at a time, and we would have had mass tokenization six months after the rules were set, whatever the rules were.

The long delay was only possible because of an aggressive use of ambiguity, I’m going to say charitably, to protect Wall Street. Maybe it was to keep Silicon Valley out of the banking business, but however you want to think about it, the SEC had a very strong commitment under previous administrations that there was not going to be mass tokenization.

We can take this further — as the digitization wave washes inevitably over everything, if we continue to use this model we can finally be done with the age of the Digital Crisis and all its chaoses, replaced with far more stable, and predictably advantageous outcomes. For example, if everybody is using an AI to put a price tag on anything they look at, and all I have to do is hold that up in the air and say, does anybody want this? Then what you could get is effectively a spot market in everything, because the AIs do pricing. In that environment is anybody going to get a destructive permanent lock in? What makes most of the big digitization disasters into disasters is the formation of wicked monopolies, after all.

Spot markets today are for things like gold, oil or foreign exchange, anything where there’s so much volume in the marketplace that the prices are basically set by magic. With a vast number of participants in a global marketplace, all you need to do is hold up an asset, then everybody uses their AI to price the asset, resulting in a market that has a spot price for everything. Add the tokens to effect the title transfer. When you have a market that has a spot price and everything, all assets are in some way equivalent to gold — the thing that makes gold, gold, is that you can get a spot price on it. So if we have spot pricing for basically everything, based on AI agents, what you wind up with is being able to use almost any asset in the world as if it was gold. Everything is capital, completing the de Soto vision of the future.

Finance and Development

In this future, all assets are equivalent to gold because you can price them accurately and cheaply, and can verify the data about them. It changes the entire nature of global finance, because that finally removes the friction from transacting assets. Then, if you’ve got near-zero friction transactions in assets, why use money? No need for dollars, no need for bitcoin; instead, a new financial system creating itself out of the whole cloth on the fly, and one that is stable and shows every sign of being rational because it is diverse and not tied to any single asset that can distort the market through exuberance and crashes. Diversification is the only stability.

Now that would be a paradigm worthy of the name “stablecoins”!

Anyone got a better plan for saving the world?

In a world that has blockchains, artificial intelligence, and a global currency crisis, we need big ideas and big reach to get to a preferable future. It’s an alignment problem, not just AI alignment but capital alignment. We don’t just strive against 2008’s AAA bonds backed by mouldy sheds alone, but against future Nick Landian factors about AI alignment.

Through the lens of AI, we can start looking at all the world’s real estate as an anchor for the rest of the economy. When we put the diligence package for a piece of real estate on chain in the form of Mattereum Asset Passport, then over time 50 or 70 or 90 or 95 or 99.9% of the diligence could be done by competing networks of AIs, striving to correctly value property and price risk in competitive markets which reliably punish corruption with (for example) shorts. With those tools, we could rapidly tokenize the world and use the resulting liquidity to keep the wheels from falling off the global economy.

This is, at least in potential, a positive way of solving the next financial crisis before it really starts and ensuring that the digitization of real estate does not create another digital disaster.

CONCLUSION

Artificial inflation of real estate prices for decades caused the global financial crisis.

We propose converting the global system from a debt-backed to an equity-backed model to solve it.

We propose using AI to manage the diligence work, and using the blockchain to handle the share registers and other obligations.

THE DIGITAL CRISIS — TOKENS, AI, REAL ESTATE, AND THE FUTURE OF FINANCE was originally published in Mattereum - Humanizing the Singularity on Medium, where people are continuing the conversation by highlighting and responding to this story.

In Los Angeles, thankfully, the fires are now contained.

Now the city faces the task of rebuilding, which brings with it whole new challenges. Some of these critical issues — like expedited permitting processes — are already being addressed. But how is the reconstruction going to be financed? Will the construction financing system be over-stressed by the sheer scale and complexity of the rebuild?

Mattereum has teamed up with the renowned Fastrack Institute and influential Bitcoin infrastructure developers Bitscape to answer these questions. “Permit to Permanence” envisages a new, faster way to complete critical construction financing steps in the LA rebuilding processes.

The LA rebuild is going to stress permitting, financing, construction, and even legal capacity very hard. $250 billion dollars of rebuilding is going to be needed, and fast. “Permit To Permanence” is the new solution being offered by this consortium of industry veterans that will allow LA to rebuild commercial real estate, homes and lives, with minimal delay.

Everybody wants to get back to a “new normal” — they want to “build back better” and to get out of crisis conditions and back to normal, but this time a normal which will not risk their home inadvertently trending on social media again. We can help get people back home safely by expediting the “Permit to Permanent” journey. To start that journey, proposed buildings need permits, affirming that the construction is safe before it proceeds. This is particularly vital in earthquake-prone LA. The faster they get those permits, the faster rebuilding projects can move to the next stage: financing, which is where our story begins.

Currently all ways to get funds to the people who need financing to rebuild their homes, businesses and lives are slowed down by bureaucratic red tape and numerous intermediaries all taking their margins. Our consortium has come up with a revolutionary proposition intended to streamline recovery by standardizing the paperwork for various processes including construction finance, and integrating smart contract technology, thus enabling the rapid deployment of capital from the $2 trillion Bitcoin liquidity pool (+$1.5tn of other assets) into the LA rebuilding process. This is Permit to Permanence.

This breaks revolutionary new ground for Mattereum: we stand on firm foundations in disaster. Mattereum CEO Vinay Gupta started the company in 2017, after 15 years of experience in emergency sheltering and critical infrastructure modelling (and associated fields). When it was launched, one of Mattereum’s long term goals was to use the company’s innovative blockchain lawtech to streamline disaster reconstruction.

Mattereum’s innovations have been deeply rooted in the Ethereum blockchain, which has always been able to provide the smart contract architecture that Bitcoin did not. Now though, using Bitscape’s creativity, it has become possible to operate smart contracts on the Bitcoin blockchain, to access a much larger pool of working capital. These smart contracts make Mattereum’s innovations work just as well on Bitcoin as on Ethereum, something that a year ago would have been dismissed as impractical. Mattereum will, of course, continue to offer services on Ethereum.

The Bitcoin community’s entrepreneurial mindset and technical sophistication makes it particularly suited to providing the financial infrastructure needed to rapidly deploy massive capital to support rebuilding efforts. By connecting this digital breakthrough to Fastrack’s framework for empowering cities to bring together their leaders and inhabitants to find solutions for critical civic problems, you have a technique machine-tooled to provide the financial infrastructure needed to rapidly deploy capital and kickstart rebuilding efforts in Los Angeles, and ultimately, anywhere in the world. This is a sophisticated new approach to streamlining finance for disaster recovery in the US.

Vinay also has prior experience in helping with the housing crisis in Los Angeles, having seen his “hexayurt” emergency shelter technology, developed in 2002, adopted by the LA Launchpad project. There, church groups and others provided hexayurt emergency shelters to homeless people in the city as a winterized alternative to tents. Hexayurts are durable structures made from cheap, readily available materials designed to be fabricated quickly post-disaster to provide emergency shelters that do not have to be stockpiled and then shipped in from far away warehouses.

CEO Vinay Gupta says “As soon as I saw what was happening in LA, I knew this is exactly what my path had prepared me for. When I worked at Rocky Mountain Institute I saw that building and rebuilding in the era of unprecedented natural disasters would need a new systematic approach. I went on to develop this, taking in aid transparency, ultra-efficient disaster architecture and critical infrastructure design. I then project managed the Ethereum launch and went on to set up Mattereum to create the highly transparent global transactional technology needed for world trade, and yes, disaster relief. This LA project puts all that into action. We will achieve fast “permit-to-permanence” via Bitcoin financing.”

As far back as 2009, Vinay was also a pioneering innovator in decentralised finance (DeFi) and decentralized physical infrastructure (DePin) having helped get over 100,000 solar lighting units deployed in refugee camps. Based on that experience, he developed a proposal for a new system for financing distributed infrastructure deployments. The goal was to reduce barriers to infrastructure investment. The goal was encourage the financing of “build back better” distributed infrastructure solutions after natural disasters, by solving issues in project contracting, monitoring, and reporting. In 2009 he wrote “The challenge is to imagine full end-to-end decentralization in infrastructure, including financing. Every step can be decentralized, from raising the capital, allocating it to loans or triple-bottom-line investments, deploying the infrastructure systems, repaying the loans and measuring the impacts”.

15 years ago we started the journey that led us here, today, with the capability to expedite the flow of funds into fire-worn LA. Going from technology to lawtech and back has been a round trip for the ages. Our understanding has matured over all of those years. We really do have the tools to help here.

The new consortium can help people get back to their homes faster.

Reach us at: policy@mattereum.com

The consortium wants to grow rapidly to meet these challenges. If you have relevant expertise in LA planning/zoning, compliant prefab and modular building systems, are on the ground hoping to rebuild (particularly multi-family/commercial, or large numbers of homes), please immediately send us an email about your capabilities or needs. The consortium and its members are also looking for resources to scale operations.

Getting home: financing the rebuilding of LA with Bitcoin was originally published in Mattereum - Humanizing the Singularity on Medium, where people are continuing the conversation by highlighting and responding to this story.

Posting on X, Ethereum founder Vitalik Buterin recently expressed his concerns about the chain’s current use case, saying, “This worries me. Because it feels like an ouroboros: the value of crypto tokens is that you can use them to earn yield which is paid for by… people trading crypto tokens”. Famously, the ouroboros is the image of a snake eating its own tail, found in cultures across the world from ancient times, and Vitalik has hit the nail on the head here, yes, crypto does just eat itself.

• Finite Crypto is — Token trading. A one dimensional, zero sum game where anyone making money does so through someone losing money, not through creating real value. It is just shifting money about. This has only a limited lifetime before capital moves on
• Infinite Crypto is — Opening up crypto to real world uses. Multi-dimensional, innovative, flexible, forward looking. A non-zero-sum game. Where money is made by creating real world utility that generates true value. This has unlimited potential.

Currently what “crypto” means to most people is a finite, one-dimensional, zero sum game that is just about token trading; any “yield” a token seller gets comes at the expense of another token buyer losing money. The money just goes round in circles, crypto is not generating any new value, it’s moving value from one person to another and relies on new money coming to the market to keep making it possible for existing token holders to cash out. As with a casino, the only winner in the end is the house; whatever someone does, those gas fees still have to be paid. It is all very finite and constrained. Crypto only works because of the dollar’s weakness as it does not suffer from inflation like the dollar does, so crypto buyers try to use it as a hedge against inflation.

Ethereum has the potential to create so much more — Infinite Crypto, but isn’t really being used for anything innovative now, it’s not generating value in any real sense. Token trading is simply a way to move dollars about — token buyers spend their dollars on token, token goes up, maybe token goes down, and someone, somewhere, gains some value, then cashes their tokens out into dollars to spend it in the real world (paying those gas fees on the way). Even when token trading is done in a hundred percent legal way, it is still just moving money from losers to winners, it all just goes round in a circle and doesn’t grow — finite. At the moment, growth in crypto is mostly an illusion, it gets bigger because more retail investors put their savings in, not because crypto does something useful that increases value.

All this was neatly encapsulated, weirdly enough, by a scholar of religion named James P. Carse. He said “There are at least two kinds of games: finite and infinite” and defined them in this way: “A finite game is played for the purpose of winning, an infinite game for the purpose of continuing the play”. Currently crypto is a finite game, but crypto needs to become an infinite game, with evolving rules and boundaries, where the purpose is to keep things going and continue to create new value in as many ways as is possible. We are done with the old crypto — Infinite Crypto awaits, free of the shackles and constraints of the finite token game and open to the multiplicity of reality.

Vitalik understands this better than most and realises its implications saying, “while defi might be great it’s fundamentally capped and can’t be the thing that brings crypto to another 10–100X adoption burst.” Crypto has been around long enough that most people who feel at home with the token market as it is have already bought into it; there may be an incremental growth in numbers perhaps, but not the 10–100x step change that Vitalik sees the potential for. He can, though, see where that’s coming from — “I would love to see a story for where the yield is coming from…that’s rooted in something external”. The next step for Ethereum lies in connecting to infinite possibilities of the real world, in other words.

Crypto as it stands is playing the finite game, Infinite Crypto, is where we need to take things next, breaking out of the current doom loop of finite crypto. Infinite Crypto is where the growth is, that’s what will make sustained money for everyone. If we fail to break out of the doom loop, the capital will eventually go elsewhere and the blockchain will end up like Second Life (do any of you even remember Second Life? Second Life was the future once, long, long ago), a niche digital world with almost no impact on real life. Finite games always end, they become stagnant, innovation stops, they die.

But this is not what Vitalik and the team created Ethereum for; it was created for Infinite Crypto, it started with a vision of transforming the entire world, but it has become limited and massively inward facing, all about those finite zero sum games. You can play the casino game just as happily with Bitcoin as you can with Ethereum, if you really want to, but Vitalik and his team built Ethereum for smart contracts, and the real world is built on contracts. Find a way to enable Ethereum to streamline real world contracts through smart contracts and it starts to generate actual yield, yield for potentially everyone involved, not yield produced by taking money from losers to give to winners (and on a pretty random basis at that), there’s an infinity of opportunity for the taking.

A conservative estimate suggests that there’s half a TRILLION dollars to be gained by enabling efficiency savings in international trade and business, the kind of efficiency savings that Ethereum is eminently well equipped to provide — the International Chamber of Commerce reckon there’s $280 billion in things like import and export deals, currently encumbered with telephone book thick paper documentation (yup, they still print it all out and cart it around), then there’s $100 billion from the deregulation of US real estate commissions that open them up to innovative ways of dealing with property contracts and all that associated paperwork, not to mention real estate in the rest of the world. On top of that there’s likely to be well over a hundred billion in other savings here and there, so half a trillion is probably on the conservative side. Then there’s value-added services in the real world that could use Ethereum — it can deliver proven, valid, data for AI based searches on real estate that prevents the AI from hallucinating, for example. If there is any doubt about its veracity, the data can be checked back to the blockchain and verified.

This is all business that could be transacted over Ethereum, business with real, actual, yield, the kind of yield Vitalik means here, and it is pretty much infinite. Vitalik is reasserting the original vision, he is reminding us of the way, that this was the future once.

Ethereum has had its playpen stage, where idealistic utopians dreamed of a financial system untethered from the state and from tax, and has seen that largely swept away by ruthless speculators and, yes, outright scammers, who have turned the whole space into a dog-eat-dog wilderness (with RFK Jr we’ve seen what happens to your reputation when it’s alleged you eat dogs…. ). Now though, with Vitalik’s lead here, it’s time to grow up and grow out, to connect Ethereum to stuff that generates yield all round and use the business world to drive that 10–100x adoption that Ethereum is ripe for, Infinite Crypto. Right now, crypto risks just stalling out and senescing, it is basically on life support from people sacrificing their futures to buy a bunch of worthless shit coins, and lending on crypto assets is just a way of building up leveraged positions and instruments that have no economic fundamentals — all that technology could be doing mortgages instead; business, with actual yield.

We have every opportunity to make Ethereum economically productive in the real world without breaking the law. The future for the blockchain has never been brighter, but that future is only accessible after the scamming stops, we break out of the loop and attain the infinite.

We need to get back to the original Ethereum vision

This is good news for me. After being the Ethereum launch coordinator in 2015, I set up Mattereum in 2017 to achieve that future. Since then, we’ve been working on laying the foundations, putting the tools in place to enable Ethereum to interact effectively with the real world. We’ve sorted out the lawtech so we can make smart contracts enact real world contracts that are legally binding, and backed them with warranties that work under the 1958 New York Convention on Arbitration, so they stand up in court in any of 170 countries. We have the tools that connect Ethereum to the physical world, the tools that can be used to bring those efficiencies to world trade, that enable novel, creative business solutions to use Ethereum.

Vitalik has given us the direction, we have built the tools — together we can uncoil the snake, Infinite Crypto is within reach.

BEYOND THE OUROBOROS — Finite and Infinite Crypto was originally published in Mattereum - Humanizing the Singularity on Medium, where people are continuing the conversation by highlighting and responding to this story.

…And Why Gold on the Blockchain Makes Them Obsolete

Mattereum’s partnership with Sempsa JP, one of the world’s oldest and most respected producers and distributors of precious metals, is enabling us to tokenize gold through our German regulated exchange partner Swarm in quantity, giving investors immutable proof of ownership and provenance so that every token has a traceable, legally enforceable, connection to a specific gold bar in a named vault and warranties relating to its provenance and other qualities, legally valid in 170 countries worldwide. To make it even easier to put gold, or any other high value asset on chain, the Mattereum group, through its German subsidiary Mattereum GmbH has a discount token, MATR*, on sale through Swarm. This gives anyone onboarding assets a discount of up to 50% on their onboarding fees, which is significant when you are talking about gold bars.

With other forms of tokenized gold, the value of the token is backed by gold that remains in the ownership of the token issuer, and you just have to trust that it’s there. With Sempsa gold as an NFT, backed by a Mattereum Asset Passport (MAP), the token buyer indisputably owns the gold to which the token is bound, and their claim to it is enforceable by international law in over 170 jurisdictions. This combines the solidity and value of owning a physical gold bar with the convenience, speed and flexibility of selling NFTs. No more needing to have bars lugged from the seller’s vault to the purchaser’s vault, no more complex paperwork, no more hassle. This is new, this is revolutionary, and it has the potential to kill stablecoins stone dead.

It has the potential to kill stablecoins stone dead

How so?

Stablecoins exist because they claim to offer the convenience of being blockchain tokens, but with the kind of stability that Bitcoin can’t provide, through being pegged to a currency, usually the US dollar, so that the stablecoin always has a set dollar value that doesn’t fluctuate — pegging (an unfortunate term [nsfw!], I know, but given the nature of stablecoins, maybe not inappropriate). As a result, they are meant to act as stable repositories of value against Bitcoin’s wildly fluctuating price. It is not uncommon for speculators who have reaped vast profit from Bitcoin fluctuations to cash out and put the earnings into stablecoin to hold onto the profits instead of trading it in for fiat and putting it in a bank.

So why is tokenized gold better? Why does it make stablecoins dead men walking? Well, for a start, stablecoins are not stable. We’ve already seen that can happen when stablecoins go wrong and depeg, and it was ugly. When TerraUSD and LUNA did it in 2022, it wiped out billions of dollars in value, and there were more than 600 fiat-backed stablecoin depegs in 2023 alone. Not so stable.

There were more than 600 fiat-backed stablecoin depegs in 2023 alone

Tokenized gold done through Mattereum so that it legally bonds the token to a named gold bar — one bar, one token — can’t depeg, it creates a StableNFT that is massively more solid than any stablecoins. Faced with this innovation, stablecoins are already dead, they just haven’t realized it yet.

Let’s dig into that a bit more. So how do you make a stablecoin? Somebody gives you $1 You put the dollar in the bank. They ask for the dollar back, you take the dollar out. Okay, great. That’s fine. How’d you make a living? Well, option one is the bank pays interest, which means it’s lending that money out. And you hoped the bank is stable and doesn’t lend the money to the wrong people. Maybe that’s fine. Maybe it’s not. Option two is to charge transaction fees like Mattereum does on the gold. You give us the gold. We charge a fee. That means that we’re not doing anything stupid with gold. In the meantime, we just hold on to it, we don’t move it, and that costs us some money and we charge that to you. Option three is you give me that dollar and I go and put it into the lowest risk legitimate investment instrument — one of these index funds type things. Now the thing that I told you is worth $1 is correlated to the stock market and if the stock market crashes we’re both toast, but if the stock market booms you get your dollar back and I get to keep all the upside. Then you imagine option three, but with shitcoins, and that’s a stablecoin, and the very, very large providers of stablecoins have problems, because that model is inherently problematic, inherently unfixably problematic; Tether has horrible, horrible lockbox issues. Nobody really knows what’s going on in there. Then USDC had a bunch of money in Silicon Valley Bank. If Silicon Valley Bank had not been bailed out by the US government, they might have had really serious problems — it turns out that they had about 8% of their reserves in that single financial institution, but no one owning USDC knew that until the bank hit trouble. So stablecoins are highly opaque. They’ve proven that they have interdependence with the global financial system and so are inherently volatile. Plus, there may or may not be issues of mismanagement that can be discovered at any time.

So, OK, you could say, that’s why we have central bank digital currencies (CBDCs). They are stablecoins, but unlike the privately issued stablecoins I’ve been talking about above, they are issued by a central bank so are no more likely to depeg than the money in your pocket (I am assuming some of you still use actual cash there). Well, yes, but these still have problems that make gold bound stable NFTs a better option. Like the dollar or pound, or whatever currency you choose, any CBDC linked to those is going to suffer the same problems with inflation that steadily erodes their value, at 2–3% inflation a year, which is less than recent rates, it doesn’t take long for a CBDC to have a fraction of the buying power it once did. Not so with gold, gold value, as I said, is steadily going up, and a stable NFT for a gold bar is going to do the same, so it’s still better than a CBDC stablecoin.

The core problem with privately issued stablecoins is a lack of transparency because you cannot see exactly what your stablecoin is backed by — that is proprietary information to these guys. But this proprietary information is what you would need to have full insight into a stablecoin and be able to do a full analysis and be sure what you were getting for your dollar. It’s not like it’s a small pool of these things — there’s $140 billion in them. What I’m suggesting is that the first criteria that you want for a stable instrument is staggering, bright side of the moon, black and white photography levels of clarity. You want a zero atmosphere full daylight shot of where the underlying asset is. With an on chain gold StableNFT backed by a MAP, that’s what you get. It’s this chunk of solid gold; it’s got this number; it’s in this building here. You own it.

You cannot see exactly what your stablecoin is backed by — that is proprietary information to these guys

In theory, that could be a dollar in a central reserve bank account instead. You can have an account with the US Federal Reserve Bank — you could just say there’s a million dollars in the Fed and million tokens one to one, here’s your deal. You could have a situation where you have an absolutely transparent portfolio. We can say we own a single thing and it is backed with a BlackRock index fund and for every dollar you give us we buy BlackRock index fund; here’s an audit report that says this is exactly what we own. We own 151,000 shares and our current market value x that is more than your reserve. Have a nice day. You could use gold and then it would be dollar price, gold, you give us $1 — we buy gold, when we can show you that there is enough money in the portfolio. We like the gold option, anything even remotely tied to dollars loses value due to inflation. Gold doesn’t — in 1929, ten gold bars would buy the average house, and today, ten gold bars will still buy you the average house.

Anything even remotely tied to dollars loses value due to inflation. Gold doesn’t

There’s no reason that you couldn’t use any single appreciating asset in a very simplistic way. If your asset value goes up, your investment goes up, and if it goes down, so does your investment. What you wouldn’t get with that is any of the fancy schmancy obfuscated hedge fund stuff, where if that asset went down, you are meant to have something else in the portfolio that would go up. Everything balances and you aren’t supposed to lose money, and, hopefully, you gain some. But as soon as we go down that path, we wind up a highly opaque hedge fund that sells portfolios, which are being used to theoretically secure value in an asset that is not supposed to go up and down. So basically, the suggestion here is that you either pick one thing and your stable coin goes up and down to that one thing, or you pick a basket of things and they’re connected by super complicated maths and you have to pray that that thing is stable, and that’s what the grown ups are supposed to do. However, those grown ups are called hedge fund operators. And hedge funds implode all the time. So if you’re going to pick one thing and anchor to that thing, it should either be something like $1 in a Federal Reserve Bank Account, or it could be an index fund object, or it could be something like US Treasury bonds, or it could be a gold brick, but these are the kinds of assets which have extraordinary ease of audit. And then at that point, you either have a token attached to a very large very non-transparent bucket of things or you have a token which is directly attached to a thing which is extremely audited. These are your two choices.

Mattereum has made it easy to have a token directly attached to an asset which is extremely audited. The MAP enables a firm legal binding between the asset and the token, so that ownership is solid and provable. The asset we believe is the absolute best to bind to is gold, so that is what we have done, and we are looking to grow the gold ecosystem, we’re building to increase opportunities for token buyers to own something that really is stable and acts as a repository of value. Also, Gold is steadily going up in value, dollars are getting eaten by inflation, even without all the underlying horrors lurking in stablecoins. The whole sector is just awaiting a deeply horrible, value-incinerating implosion, it’s only a matter of time before something blows away the whole house of cards and reveals the ‘stable’ in stablecoin to be wishful thinking. With the alternative that Mattereum’s gold-bound StableNFTs offer, why take that risk? Do you want to hang around and get pegged by your stablecoins?

Stablecoins are truly dead in the water for those who have eyes to see. Their days are numbered.

Find out more about Mattereum GmbH’s token sale*.

*The Mattereum Discount Token (MATR) is available for purchase through Mattereum GmbH’s fully regulated German crypto exchange partner, Swarm. Buying MATR is subject to terms and conditions in eligible jurisdictions — in particular, residents of the United Kingdom and the United States of America are excluded from the public sale of MATR.

Stablecoins — Inherently, Unfixably, Problematic was originally published in Mattereum - Humanizing the Singularity on Medium, where people are continuing the conversation by highlighting and responding to this story.

Mattereum has always talked about the importance of tokenized gold, we even ran a small number of gold bars through the system as proof of concept years back — it worked, we tokenized gold with a Mattereum Asset Passport (MAP), listed it on OpenSea, sold it to buyers, who then used their NFT and MAP to go claim the gold bars from the vault. It was a bit rough, but it all worked, and this was in 2021 — back when everyone else was still mostly talking about RWAs being some sort of vision for the future. You may ask “what is so amazing and revolutionary about this?” because other people already offer “tokenized gold”, but this is not the same — tokenized gold products such as Paxos and Tether Gold are not tokenized gold per se, they are gold backed tokens, i.e. they are tokens whose value is guaranteed by gold owned by the issuers. This is an important difference. Mattereum works with partners to tokenize and fractionalize gold directly; that is, to create tokens that can be traded on the blockchain that also give the token holder actual legal ownership of the underlying physical gold itself. This is literally, ownership of a numbered, specific gold bar in a named vault that is owned by whoever owns the token, and they can, if they so wish, burn the token and take the physical gold home from the vault and hold it in their hands. The gold is owned by the token holder and not the token issuer.

Mattereum works with partners to tokenize and fractionalize gold directly

So, we did proof of concept. Now we have partnered with Sempsa JP, a Madrid-based globally recognized producer and distributor of precious metals, with decades of experience in the precious metals industry and renowned for its commitment to quality, integrity, and innovation. This partnership enables us to work with Sempsa JP to tokenize gold through our German regulated exchange partner Swarm in quantity, giving investors immutable proof of ownership and provenance so that every token has a traceable, legally enforceable, connection to a specific gold bar in a named vault. This will offer unparalleled security, transparency, and accessibility worldwide under the protection of international law in over 170 jurisdictions.

Every token has a traceable, legally enforceable, connection to a specific gold bar in a named vault

So why is this important? I think it was JP Morgan, or one of those guys, a century or so back, who said “Gold is money! Silver is money! Everything else is credit!” That’s the absolutely hardline position. That is because gold is a hedge against risk in some global sense. In the same way that Bitcoin is a hedge against risk in some global sense, but there are slightly different hypotheses for gold and Bitcoin about what happens if the existing fiat regime crumbles. The difference between the two is that Bitcoin is appreciating value very, very quickly and is extremely volatile. It is also subject to regulatory attack. Gold is accumulating value relatively slowly, but it is doing so steadily and is dramatically less volatile; it is also dramatically less subject to attack. The bottom line is that gold is extremely likely to hold value globally, even in a regime where the US dollar is in trouble. You don’t want to be 100% in Bitcoin as it may not, ultimately, hold its value, and because Bitcoin may also get into trouble with regulators. Gold on chain, though, gives you a lot of the same advantages that Bitcoin does, but with dramatically lower volatility. And there is a pretty good chance that even in your nightmare scenarios your legal claim on the gold, if it was done properly, through Mattereum, will survive.

“Gold is money! Silver is money! Everything else is credit!”

Now we get to the Mattereum role in this. It begins and ends with the ultra transparent documentation value provided by the Mattereum Asset Passport. There are a bunch of things that can be wrong with a gold bar. The most common problem with a gold bar is that you don’t actually own it. You have a piece of paper that says somebody owes you a gold bar, you go and ask him for the gold bar, it turns out that they do not own the gold bar, and there’s an entire industry around all of those issues. It’s not uncommon for people to sell your gold bar or lend the gold bar out to somebody else for interest. Then, at the point where you ask them for your gold bar, they go and get another gold bar from a third vendor, because the gold bar that you gave them is out for loan and if you need a bunch of gold in a hurry, they borrow it from somebody else. There are very complicated arrangements behind the scenes that give you the impression that everybody has all the gold that you want all the time but in actual fact, it can be a shuffle. It’s widely perceived in the gold industry that if everybody pulls the gold out at the same time you’d get a phenomenal wave of bankruptcy. Now, of course, nobody can prove that, because that would be illegal. A MAP nails the NFT to a specific, named, gold bar, so it makes all this jiggery pokery impossible. You unambiguously own that gold bar, not some notional one the gold dealer claims to have while switching it about behind your back for profit and which, when push comes to shove, there is a small, but reasonable, chance they might not be able to pony up when you ask them for it.

You unambiguously own that gold bar, not some notional one

To make it even easier to put gold, or any other high value asset on chain, the Mattereum group, through its German subsidiary Mattereum GmbH has a discount token, MATR*, on sale through the fully regulated German exchange Swarm. This gives anyone onboarding assets a discount of up to 50% on their onboarding fees, which is significant when you are talking about gold bars.

Mattereum also helps handle the the risks. The gold industry as it currently stands is very well equipped to deal with the major one, which is fake gold — gold bars that turn out to be tungsten bars coated with a thin layer of gold — tungsten has the same density as gold, so that happens. There are various other kinds of shenanigans too, where you’ve got gold in the vault, but somebody’s pulling bars out of the middle of the pile where it can’t easily be seen, those kinds of things. There’s just a whole bunch of gold fraud and a whole bunch of expertise in the industry dedicated to stopping it using lots of science or technology. The thing the gold industry is really not geared up for is gold bars, which are made of actual solid, real, gold, but not the gold you thought it was. This is the whole world of conflict gold.

The original, staggeringly bad, conflict gold problem was Nazi gold. We never fully dealt with that problem, and then it came back around with Congo and maybe even South America. No one really has a good understanding of the conflict gold landscape and where it’s really coming from, or not, as the case may be. But we know it’s an issue. A few years ago English banks were doing audits of their gold holdings and they kept finding duplicate bars, so they would have a bar that was Valcambi 123456, 400 pounds, then a bit later, they’d turn up another bar, and that too was Valcambi 123456, 400 pounds, and the problem was that they couldn’t tell which one was the original gold bar and which was the conflict gold bar that had cloned its identity. Now, there’s a whole bunch of ever more sophisticated science and technology stuff constantly being developed to stop that happening, but what that means is that there’s an arms race to get conflict gold sold as legit gold before the science catches up with it. That is a new fight for the gold industry and both sides are very sophisticated. The World Gold Council is attempting to set up some global scheme for bar registers as part of this, but a bar registry also becomes a record of who owns what, and people are quite freaked out by that for obvious reasons. People still remember the US’s 1933 confiscation of privately held gold. Basically, nobody knows exactly what to do about conflict gold, but Mattereum can help deal with this too by having an asset passport that provides money-back warranties on the gold’s origin and history. If you buy a bar, you know it isn’t conflict gold, because it is backed by warranties that give you your money back if it is, and this is legally enforceable almost anywhere in the world. We’re now in a position where it is possible to make peace over conflict gold by aligning global systems using English common law through MAPs and the blockchain. Gold can be put on chain at source, with a MAP documenting its origin and updated every step of the way, giving purchasers a scrupulous and unambiguous provenance that makes it impossible to slip dodgy conflict bars into the supply chain unseen.

Mattereum makes it impossible to slip dodgy conflict bars into the supply chain unseen

This gold story is complex, and there are lots of aspects to it that are relevant to Mattereum’s tokenized gold partnership. The next aspect is the business of yield generating assets — there are a bunch of games which are played on yield. Let’s narrow it down to variable yield assets. I own a property, it generates rent. The rent varies over time and the value of the property varies over time, but we’ll just deal with the rent. The rent is a yield and that yield varies over time. We can then do a bunch of weird things with that yield so I can make you a bet that the yield will be over 1200 dollars, and if it is over 1200 dollars, you give me money. That’s a bizarre kind of thing, but the world is filled with bizarre kinds of things that people do with yield — tranching your mortgage, collateralized debt obligations, all those kinds of things. As soon as you have a variable yield asset like rent, or mortgages, people start finding ways of betting on it. So the typical way of doing this is the repayment rate on a mortgage. I basically have 100 mortgages. I tell you that on average 98% of those mortgages pay back. I then say I would like to sell you 20 years of these mortgages paying back at 98% for 95% of that amount. You say I get 3% free money. Realistically, I might take 80% and you get the equivalent of 3% a year for that time period because you bought it low and then they paid back over time and you go “great, I made money!”. If the yield is thought to be more variable than that, I might take a tranche. The basis of that is taking the most certain payments and the least certain payments, and selling them to different people at different prices, and those are what’s called tranches, e.g. for one buyer you say, “They’re meant to pay me a million dollars a month in total. I am going to sell you the first 600k that comes in”, in theory that should be completely secure for the rest of time. So for the next buyer you say “I’m gonna sell you everything that comes in between $950,000 and $1 million”. That might not come in all the time, but it’s probably going to be there most of the time. What I’m doing is I’m pulling the payments forward and invariably discounting the payments depending on how probable they are. Make sense? This stuff is basically just various forms of sophisticated invoice factoring when all is said and done. It’s invoice factoring, but they call it high finance. A lot of hedge funds and pension funds will try and have a mixed balanced portfolio of these kinds of things and they’ll use sophisticated maths to try and make sure it all balances out over time.

The entire world runs on these bets — futures markets. But in the long run, what we know is that most people are optimistic about their guesses about the future, because of persistent psychological biases; everybody wears rose-tinted glasses, particularly when they’re selling. As a result, what happens is that bad bets accumulate in the system at an enormous scale for a variety of factors, but mainly it’s down to optimism about the future, a tendency to ignore bad data, expectation of government bailout and and things along these lines. This causes this entire world of variable return stuff to gradually be assumed to be more and more shaky. The further out you go, the more risk piles up into the system, and more or less the entire global financial system is built out with this. It doesn’t have to be, though. If you want a relatively steady state economy, you start looking at things like tranching corn. Here is a field. It grows about 100 kilos a year. I would like you to pay me now for 80 kilos of that and the remaining 20 kilos you could have for half, right? You get where you can start making bets about things which are more sure. Then you get down to things which have no variability at all.

The further out you go, the more risk piles up into the system

When we ran society with no credit and no optimism bias and no betting about the future, we were in a steady state for centuries. When we injected optimism about the future and bets, what we got was crazy amounts of risk taking and speculation which turned out overall to be staggeringly performative in terms of generating innovation, which generated wealth, but in the process, we also generated a system of massively pathological incentives, because if you’re only dealing with a 20 year variable rate, the thing only has the last 20 years. So the suggestion is that basically, because we kind of packaged all that risk in particular ways, we created a situation where the underlying stuff of the world began to be depreciated in the same way that the financial instruments deriving the stuff tended to be trashed. The construction of the system basically faded the future out in a variety of ways. As a result, what we’ve been doing is consuming the underlying yield-generating resources as a way of generating artificial fake yield. In theory, you’re meant to be selling the harvest from the land. In practice, you push the land so hard that you’re effectively burning the capital of the land to generate the harvest. It’s almost like a Ponzi scheme on farmland. If we deplete the farmland every year to keep the same consistent yield, and then one day that stops, any financial instruments that are based on this yield continuing are suddenly worth nothing. What we’re doing is basically exporting risk into the future by destroying the present invisibly by degrees.

That’s been quite a detour, but let’s get back to the case for digital gold. The world needs to be more like the world was like before 1971, which is when we came off the gold standard, so money stopped being gold and the basis for its value became free floating. The world before 1971 did much heavier innovation at a much larger scale. We were staggeringly wealthy and the whole thing was really running great, apart from the fact that we had an infinite demand for oil and we didn’t have an infinite amount of gold to pay for it. But if we had to pay for the oil in gold, there’s a pretty good chance we’d be using a whole hell of a lot less of it and we’d be much more careful about how we lived.

The case for digital gold is the case against credit. It’s the case against tranches. It’s the case against complicated index portfolios and all the rest of that stuff. It’s the case against risk. We have gold, a 5000- to 8000-year-old asset that has had relatively consistent value for the entire time period, and we’re going to use that as our yardstick of value, rather than this portfolio of .com stocks, and rather than Bitcoin, which is a very untested bet, and is not even intended to be stable, it’s intended to be massively deflationary. Then we come to gold on the blockchain, e-gold, which I was paid in in the 1990s, Digi gold or the Ian Grigg stuff, Doug Jackson stuff. The way that cryptocurrency started was with gold, but this was derailed by both external and internal actions. Firstly, the US government absolutely hates crypto, it likes to have control over currency and information and crypto threatens both. With cryptography itself, in the ’90s, the US decided that uncrackable strong cryptographic applications like PGP (Pretty Good Privacy) were munitions and put them under ITAR, the International Traffic in Arms Regulations, a regulatory regime to restrict and control the export of defence and military technologies. This led to the cypherpunks getting tattoos of PGP code, and suggested that the US really hadn’t got the hang of this internet thing back then, despite their military academic complex having invented it. This did not work, unsurprisingly, and strong crypto went on to underpin Web 2.0 and modern online payment systems. The US government sat hard on e-gold too, on the basis that it was a conduit for money laundering and criminal enterprise. They also saw huge potential for Ponzi schemes in crypto, and the US government absolutely loathes Ponzi’s since such things were at the root of the 1929 bank crash. So, early attempts at de-dollarizing through crypto were stifled at birth. Mattereum’s system breathes new life into the concept, though, as it is built on transparency and legal compliance, so cannot be used in the way the US fears. Secondly, internal resistance came from blockchain purists, who felt the link to gold tied crypto too heavily to the physical world that it was intended to transcend, although, I note, they seemed less resistant to linking it to the dollar. The paranoid among you might see some kind of hidden hand at work there…. But in the end, gold is a global system not controlled by any single government, which is exactly what crypto aspires to be, so logic suggests they are natural partners. Mattereum’s creation of a global marketplace of 170 countries in which tokenized gold can be freely traded enables this, by binding the NFT to the physical gold and backing it with legally enforceable money-back guarantees.

The case for digital gold is the case against risk

For the notion of a digital economy, gold is an exemplar. Gold is old and stable. For digital economics we need to use old global stable assets as yardsticks and value. Gold is the first, but then there’s agricultural land — this is why Matterum is interested in gold and real estate. These are things which have been valuable in consistent ways for the whole of human history, and nothing says that we can’t use those things for payments. Nothing says we can’t use those things for wealth storage. It has been very difficult to do because of stuff in the fear ecosystem that’s existed since ’71. The transactional costs have always made it very difficult to do that stuff as well. But the fundamental truth of the situation is that most of the world’s genuinely wealthy people keep most of their assets in things which are pretty durable and the exception is the new money.com stuff. If you look at the old money, the old money’s more or less all buildings, and occasionally trade. So the argument is basically this. It is possible, using crypto, to massively cut the transactional costs and open up the old money ecosystem to young money, and to open up the big money ecosystem to small money. This is what Mattereum is doing.

Mattereum opens up the old money ecosystem to young money and the big money ecosystem to small money

Gold is the beginning of that process and then you do land, then you do real estate, potentially art, this is the democratization of the real wealth machinery. Then what goes with all these asset classes, the fundamental question is, “is it there?” And the answer to all doubts about “is it there?” is massively ramified insurance. Again, the old money assets are heavily insured, and heavily physically protected. That’s what the vaulting system is like. And by the way, there’s $20 trillion in vaults or whatever the number is. This is how the big guys do it and, yes, you could do it that way. We do not expect the existing system to survive without radical transformation, partly because of the overuse of credit in the American economy, or at least the global economy. And secondly, there is a huge push, I mean, just a huge push to try and figure out some kind of ecological economics framework which will work more globally and that’s the fundamental bedrock.

So you have gold, you’re doing transactions in gold, you have all the same fundamental financial needs that anybody has in the money economy. So if you need to borrow, if you’re making payments in gold and you don’t have enough gold, so somebody lends you gold, by all means do that, but it has to be understood by all parties that the gold is not yield generating. It’s not that you can make a bunch of investments, borrow money, hope investments going up will be enough to pay the interest and then come back to it. It’s just not that kind of thing, because the gold itself is not yield generating. While there will always be people to play games at the edge of that stuff and make bets on the gap between the say, fiat performance, gold performance, Bitcoin performance, all those games are there, but that is just dragging a hard asset back into the insanity.

By tokenizing gold, we are making it possible to do transactions in actual, real, gold in the modern system, digitally, on the blockchain, backed by warranties and insurance, which no one else can do. It has all the advantages of a slick modern system along with those of having someone turn up in a Fugger counting house and make their payment by tipping out a bunch of gold coins on a table that then go in a vault. Solid and tangible, but liquid and tradable; unambiguous ownership, consistent, long term value, and it isn’t going to destroy the world in a riot of over-optimistic speculation and evaporated value:

Tokenized gold on chain with a Mattereum Asset Passport.

Find out more about Mattereum GmbH’s token sale*.

*The Mattereum Discount Token (MATR) is available for purchase through Mattereum GmbH’s fully regulated German crypto exchange partner, Swarm. Buying MATR is subject to terms and conditions in eligible jurisdictions — in particular, residents of the United Kingdom and the United States of America are excluded from the public sale of MATR.

THE TOKENIZED GOLD REVOLUTION was originally published in Mattereum - Humanizing the Singularity on Medium, where people are continuing the conversation by highlighting and responding to this story.

In the launch paper for the Mattereum Group’s MATR token, which recently went on sale* I talked about how Mattereum’s groundbreaking innovations create an enforceable legal connection between the token representing an asset and the tokenized asset itself, and how this has the power to completely transform business for the future, making Mattereum bigger than Visa. We do this with a combination of legaltech solutions that connect the 1958 New York Convention (NYC) on Arbitration and the UK Judiciary Taskforce (UKJT) Digital Dispute Resolution Rules using the blockchain, which is going to enable a once in a century transformation, like when music went digital.

Now, I want to unpick exactly what this means for the future of trade.

I see the global scope of the blockchain as fundamental to all this, which is not quite the same thing as globalisation, but close. Anybody can run Free Software, anybody can generate keys, so the blockchain is universal in that sense. The best fit for that global scope in legal / trade systems is the New York Convention on Arbitration. That’s 170 countries. So wiring up blockchain transactions to the NY Convention is close to global scope (it skips North Korea - but then everything does - and a few other places). This is supercharged by the UK Jurisdiction Taskforce Digital Dispute Resolution Rules which make a ton of blockchain-specific provisions which can be invoked from any of the New York Convention counties. This gives some analysis of the rules

Some of the “Mattereum magic” has been in figuring out how to use the NYC / UKJT system to carry things like legal definitions of assets on chain in a way that can be seen in those 170 counties. The Mattereum Asset Passport (MAP) does some very sophisticated things by using suites of contracts to define asset value and risks. This makes the blockchain vital - if you try to make something like the NFT/MAP system work, only on paper, the complexity goes through the roof because you don’t have atomic swaps and various other blockchain capabilities on hand. It’s a neat system: the solution to trade on the blockchain requires the blockchain to work!

I am personally pretty pro globalisation because trade is always a good alternative to war, and rival trade blocs often wind up at war, but I do think 1990s American-led globalism is dead. What’s next?

There is a very clear difficult path forwards: we could very easily wind up with a world which runs on three incompatible global trade technology platforms: the American VISA-SWIFT etc. regime, the EU Digital Product Passports etc. regime, and the Chinese Belt and Road etc. regime. In this instance trade between these blocs will slow down over time as the technical and legal friction of trading across borders is reduced within the systems, but trade between these systems is more costly and difficult. I lay out this case in some detail here (which contrasts the blockchain with high frequency trading systems). You can even find threads of this model in my 2015 “Programmable Blockchains in Context” piece written for the Ethereum launch day. The problems database systems have interconnecting using APIs are even more severe when we start looking at things like automated customs clearing systems.

Is there a more peaceful, positive path we could take? Maybe this: internet-led globalism: Wikipedia style global shared resources, and Alibaba-style free trade. “One ERC721 NFT per item” assets work pretty much anywhere. “Many ERC20 fractional ownership tokens per asset” is likely to work best in the EU under MICA, at least at first. So the goal state is “world trade moves to the internet” — a “back of the envelope” calculation would be $250bn of savings a year, estimated – and “real estate moves to the blockchain” — $150bn a year of savings, estimated.

This is a different “theory of value” of the blockchain to the bitcoiner’s “governments can’t stop printing money so eventually all fiat goes to zero and only Bitcoin remains” model. In practice governments don’t die easy. They’ve got moves: they’ll use them. So the hardcore “internet maximalist” view is centred around trade not money-like tokens, we don’t care what tokens are used to pay for real estate: ether, dollar coins, wBTC, digitised gold bars, CBDCs, SDRs, Doge, what we care about is the transactions happen basically paperlessly, AND we get a cut of the transactions for securing them. That’s our business model: get as much of $trillions of transactions on chain as possible, and take our cut from every one. Currently it’s all still 30-day invoicing and bank transfers once you start routinely dealing with assets over about $10k, never mind the arcane mess that is real estate transactions. Some of the regulations governing that are still written on goat skin, and you breathe a sigh of relief if a transaction only takes three months, because that is currently what passes for fast and smooth.

We aim to change this, once and for all.

If this takes off, it’ll do for real estate and trade:

• what Big Bang in the 1980s did for trading stocks and shares (electronic exchanges replaced human face to face exchange in trading pits!!!)
• what Spotify did for music
• what Amazon did for physical goods purchases
• what Netflix / YouTube / TikTok did for video

Digitisation of entire industries is routine at this point. Each one needs new technology. Amazon needed HTTPS cryptography and certificate authorities. Spotify and Netflix needed The Cloud, and so on.

Our bet is that real estate and global trade need Ethereum to move them online.

If we are right, your transformation will be much larger than just tokenizing stocks and bonds and revenue streams from rental homes, the current “RWA” leaders. Stocks and bonds etc. are already massively digital and traded on the internet, tokenizing them is an additional improvement but an eToro-type training app isn’t so much worse than real tokens.

The improvement is incremental.

But enabling internet trading for assets that are currently ENTIRELY manually traded is an absolute game changer. Half a trillion dollars a year of savings by the time cars and a few other things are added to the mix. That’s a lot of potential.

Just to quantify it a little.

Half a trillion in savings, cut five ways: buyers, sellers, exchanges, technology providers, traders/market makers/lawyers and other middle men niches that are created - three out of five are maybe new companies. $300bn a year at a 10x multiplier suggests $3 trillion in market cap for the companies living off that revenue stream, kind of about the size of the entire internet retail industry that currently exists. Now you can argue this 50 different ways: 10x multiplier? How long will it take to get to this scale? Why did Tradelens fail etc, but there are four billion dollar companies just trading sneakers right now.

What do you think tokenized real estate is going to do?

And we are playing for the position of “the company everybody uses to lift their assets up to the blockchain”.

All the global legal stuff and the risk management and dispute resolution and so on — build your own or use the same stuff everybody else uses. A parallel there is the ISDA template contract which carries most of $600 trillion of derivatives. Standardisation pays! That’s one paper contract template that defines what a derivative is, broadly speaking. (I should say the $600 trillion of derivatives mostly cancels out — it’s about $20 trillion of actual money so about 10x the size of the crypto market.)

These macro trends are huge beyond all imaging, they’re just staggering in scope, and yet we see people getting wildly excited about relatively small local transformations - remember that fashion for “decentralised Uber” for a while? It’s potentially a really good business, but the city itself is up for grabs, not just the taxis!!

It’s all a question of scale in the end.

So with a story that large, where do you start?

“There is only one world and trade can and should work the same way everywhere” and the rest just follows.

Ethereum needs a new narrative. Ethereum needs a new plan.

THIS IS IT.

And all this comes down to enabling legislation in the end:

• UKJT digital dispute resolution rules (tertiary legislation?)
• MICA in the EU (coming into force by degrees, starting later this year)
• Electronic Trade Documents legislation in the UK (brand new late last year)

Getting things up and running to fully utilise the global opportunities created by the new legislation is key. That’s what opens up their new vistas.

That’s what we’re doing.

Those are the vistas that Mattereum is opening up.

Just One World with Mattereum.

Find out more about Mattereum GmbH’s token sale*.

*The Mattereum Discount Token (MATR) is available for purchase through Mattereum GmbH’s fully regulated German crypto exchange partner, Swarm. Buying MATR is subject to terms and conditions in eligible jurisdictions — in particular, residents of the United Kingdom and the United States of America are excluded from the public sale of MATR.

JUST ONE WORLD WITH MATTEREUM was originally published in Mattereum - Humanizing the Singularity on Medium, where people are continuing the conversation by highlighting and responding to this story.

In an epic ten-year spree, Ethereum has shown its potential to change the world for the better, but to achieve its full potential it has to extend its reach and firmly grasp real world assets (RWA)

============================================================== TLDR

Mattereum GmbH has launched the MATR token through Swarm, a German exchange regulated at the same level as a bank. This token gives significant discounts to users of the Mattereum system when onboarding assets. Nine years ago I was part of the Ethereum team that wrote the rulebook for the future of finance and many other things, now Mattereum is delivering on this by enabling Real World Assets (RWA) to be put on chain safely and effectively. The landscape has been changed by TradFi deciding the future is tokenized assets. Mattereum’s system is the only one that can make this work. It provides an enforceable legal connection between the token representing an asset and the tokenized asset itself.

This has the power to completely transform finance for the future and make Mattereum bigger than Visa.

This is a once in a century transformation, like when music went digital

Please note that the Mattereum Discount Token (MATR) is available for purchase through Mattereum GmbH’s fully regulated German crypto exchange partner, Swarm. Buying MATR is subject to terms and conditions in eligible jurisdictions — in particular, residents of the United Kingdom and the United States of America are excluded from the public sale of MATR. Sorry about that, folks.

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At the end of January, Mattereum GmbH launched its token MATR* on Swarm, a German exchange regulated to the same level as a bank. As I write, prior to our big marketing push, it has already sold something in the region of $650k of tokens. This is the culmination of a long path that began, for Mattereum, back in 2017, but for me, much earlier.

Nine years ago (almost to the day!) I started as launch coordinator for Ethereum, and I set out the big vision for it in Ethereum’s launch document Programmable Blockchains In Context. It was nothing less than a new vision for the blockchain, a vision based around smart contracts. Bitcoin’s launch in 2009 is conventionally seen as the inflection point, the moment when everything changed, the moment when the blockchain became the future. I am not so sure, we’d definitely never seen anything like that before, but Bitcoin was weird money, and decided to stay as weird money, even though the prospect of the blockchain being able to do everything could be seen by the far-sighted from the start — Satoshi got it, it’s there in the original Bitcoin whitepaper — “Transactions that are computationally impractical to reverse would protect sellers from fraud, and routine escrow mechanisms could easily be implemented to protect buyers”.

So, Ethereum happened. The key thing that you could do with Ethereum that you could not do with Bitcoin was smart contracts; you could use the blockchain as a computer to execute digital contracts that would allow it to do almost anything. This loosed the true potential of the blockchain on the world — the ability to create new kinds of property, beyond money itself. It is perhaps this that was the true inflection point. In a piece I wrote when ETH hit $100 I described its origins as “a bunch of funny-looking villains pull together this remarkable piece of technology which, at the time, we thought was going to change the world”, and well, it kind of did, but maybe not how we envisaged it.

As I write this ETH has just hit $3500, the NFT craze, which needed Ethereum to function, has come and gone making a whole lot of people a bunch of money, then, just as quickly, losing it for them again. There have been scandals, frauds and rug pulls, and the entire reputation of the blockchain, particularly Ethereum, stank like a month-old kipper for a while. But those of us with the long view know about the Perez Cycle. This describes how world-changing innovations undergo a steep innovation curve, create unsustainable bubbles, which burst, ruin a lot of people, become radioactively untouchable for a while, then have the sound, workable elements picked up by mature actors and built into solid, useful and profitable long term businesses. We saw it in the dotcom boom, we saw it in 1929 with the stock market, and even with the railway boom way back in the mid-19th century. Out of these came web 2.0, the modern financial system, and most countries’ transport infrastructure. And so it is with Ethereum. What we have seen so far may not have embodied the vision we had for Ethereum, but that vision was not lost.

I have kept that vision in sight and sat tight. Mostly, the Mattereum team are old, at least compared to other blockchain people, and have seen the Perez Cycle before; one of our team ran a top level domain in the early 2000s and I lived through the dotcom crunch. While bull markets turn to bear markets and back, and crypto winters come and go, we have had our eyes on long-term mature use cases. We have spent the time doing the hard, complicated, slow work that builds the machinery to make Ethereum everything it was supposed to be so that it has a long-term future.

If you wonder why the blockchain has not got greater traction, why it has just been the locus of fads, fancies and scams, it is because it hasn’t had a mechanism to connect it to the real world. It’s been like an engine revving in isolation, it needs the gearbox to connect it to the wheels so that it has grip on the road and the traction to actually get somewhere. Mattereum has been building that gearbox, the thing that gives the Ethereum blockchain a way of grasping the physical world by firmly and legally connecting it to RWA. That way it can achieve what it was always meant to do. The reason I left the Ethereum Foundation was that I saw that this is what was needing to be done and it was becoming increasingly clear that they were not going to do it, so I needed to. Now I have, through Mattereum.

But what is it exactly that I have done? What was it that took six years and millions of dollars of investment? Mattereum has built the digital and legal infrastructure that enables the sale and lease of physical property and other assets through smart contracts using Ethereum. To do this we have created the Mattereum Asset Passport (MAP), which is a detailed product description of physical assets backed by legal warranties bundled together using smart contracts on the blockchain. With our partners at Swarm, we can now tokenize any asset a lawyer can recognise and fractionalize it too, and any asset or fraction of an asset comes with the Mattereum protections. This means that when you buy a real world asset token that has a MAP on Ethereum, you have unambiguous legal ownership of the linked physical asset. If you buy a token representing a gold bar, it enables you to turn up at the vault where the gold bar is stored and say “that specific gold bar there is mine” and have your claim accepted.

This is major — it is a potentially world-changing innovation.

Moreover, a MAP provides guarantees that the real world asset it describes is as claimed. If you buy a piece of real estate with a MAP that has been guaranteed to be in a certain condition and you turn up to find the roof leaks and the drains are blocked, you have the right to make a claim and be compensated. It is not just Mattereum that makes these promises, it is independent guarantors, and legal claims against them can be made in 172 jurisdictions worldwide — Mattereum’s legal infrastructure is built on UK common law provisions for digital commerce and is enforceable in 172 jurisdictions under international law. We help create a doubt-free environment for trade. We’ve started with gold, real estate, luxury goods, art, antiques, and other items where authenticity is particularly important, but ultimately our system could be used for everything. There are huge implications for this that I’ve explored in more depth elsewhere.

It’s easy to claim to put physical, real world stuff on chain, but it’s hard to prove that the stuff is real to a buyer on the other side of the world, and it’s even harder if that buyer is an AI (the Mattereum system also has important implications for enabling AI to connect to the physical world). Without the ability to prove that stuff is real, there’s no way to keep scammers out, and RWA scams will make the old NFT scams look trivial. Allow the scams to thrive and the long term viability of Ethereum as a global platform for trade will be doomed. Mattereum’s system squashes scammers like bugs.

If you buy things like stock in major companies, say Facebook or Tesla, due diligence is built in, but for most other things, like real estate, you have to do that work for yourself before you buy, and it’s expensive. Diligence is the hard problem in almost all financial transactions.

Mattereum solves this; it is essentially a diligence facilitation company for Ethereum. Any transaction done on Ethereum for an asset with a MAP has the diligence done automatically.

We can do this for Mattereum customers, but we can also do it for other companies in the RWA space. Making it work took time and money (a lot of both); other companies putting RWAs on the blockchain don’t have to repeat that work, we can provide our system to them as a service, giving them a shortcut to secure and reliable tokenization and fractionalization.

Mattereum has built upon successive waves of innovation on the blockchain that have peaked and then crashed, building as more and more people get involved. At each step there are ten times the number of people involved than were in the previous wave, and each time that happens the story changes radically. Eventually the innovation reaches escape velocity and goes stratospheric, and, I believe, this is where we are now.

Our system has the potential to be the rails on which the future of commerce runs. Serious TradFi people are getting it; Larry Fink from BlackRock Capital has come out in favour of a tokenized future, saying that their great new horizon is tokenization of every real world financial asset, and Mark Yusko, founder of Morgan Creek Capital Management, has followed him, saying “everything of value in the world will eventually be a token”. The City of London, too, gets it, the world’s leading financial centre. The Lord Mayor, who heads the City, has set up his Smart Economy Networks project, which has tokenized assets as a major plank and actually names Mattereum as a key company in the network. Before all this, Sir Geoffrey Vos, the Master of the Rolls, head of the UK’s civil justice system, involved Mattereum in the development of the UK’s Digital Dispute Resolution Rules (DDRR) as he is a firm believer in the blockchain as the future of commerce, and sees the opportunities offered by Mattereum’s innovations. Mattereum has gone on to be the first company to use the DDRR in their work.

Over the past ten years we’ve gone from a single lone hero talking about building smart contracts into Bitcoin (Vitalik’s MasterCoin) to the leaders of TradFi insisting that blockchains, tokenization and similar are the future of finance.

We nailed this. Too early to know if we won or not, but back in 2015, the Ethereum team wrote the rulebook for the future of finance and many other things. Now Mattereum is delivering on it.

In the end it’s about the money.

How much money?

All of it: how much information is left offline these days in unscanned paper books and undigitized music? A few percent. What we are doing is like that, but with money and assets. We have the potential to be bigger than Visa; I had long conversations about Mattereum with Dee Hock, Visa’s founder, and he did not think this was ridiculous.

Ethereum is now hitting Early Adopters where institutions with real use cases stop trying to fit the technology into their existing technology stack, and start moving their assets on to Ethereum’s technology stack, Mattereum is here to guarantee that this works. This is the beginning of “TradFi” and “DeFi” merging into, well, just “Fi”.

This is a once in a century transformation, like when music went digital. That doesn’t happen twice.

We held back on issuing a token until now, until we were sure we were being lifted by an unstoppable rising tide, and the legal, licensing and regulatory environment were ready. We could have leapt onboard with one during the ICO goldrush with everyone else, but our strategic mindset said “wait”, and we were not wrong. With the mature use case for the blockchain that we were planning for now being understood by the serious players, now is the time, so the decision was taken to launch MATR, a token offering discounts on Mattereum’s products and services.

Mattereum’s purpose is to provide a legal structure for RWA operations on the blockchain so that when users buy a tokenized asset such as real estate or gold, the purchaser of the token unambiguously owns the connected physical asset, or a fraction of the physical asset if it has been fractionalized as well. As a result, it was particularly important for any token associated with the Mattereum Group to be constructed in a legally sound way that provides the protections for purchasers that many other tokens fail to do. Without such protections other token buyers are vulnerable to rug-pulls and other sharp (and illegal) practices. To do this, Mattereum’s chosen path was to incorporate a subsidiary in Germany (Mattereum GmbH) which could mint and sell the MATR token through Swarm, a fully regulated and licensed German exchange operating under the same regulations and to the same standards as TradFi banking institutions in Germany and so providing customers with equivalent protections.

This was not, perhaps, the simplest route, but it was the one that gave MATR the absolutely best protection. We believe we are the first group to issue a token through an exchange regulated under the same rules as banks, but we hope this paves the way for more people to do things the same way. It involved more lawyers and negotiation than other routes, but it works, and now we’ve done it we can help others do it too, adding assistance with token issue processes to Mattereum’s portfolio.

The Mattereum Discount Token White Paper gives the exact formal details of how the MATR token works, but essentially it offers a discount on Mattereum fees for transactions with real world assets on chain, such as Onboarding Fees and Certifier Fees. Each token used reduces the fee by 1% and given that, in turn, onboarding fees are 1% of the assets’ selling price, for the kind of assets we’ll be onboarding, the discount received for using a token could be substantial. Let’s just have a look at how that would play out in a real transaction:

If a client wishes to onboard a $1m asset, the onboarding fee would be $10,000. If they use MATR tokens to reduce this fee, each token reduces the onboarding fee by 1% (subject to a maximum discount of USD $10,000), and a user can burn up to 50 tokens per asset. So for that $1m asset this means that burning the maximum of 50 tokens would result in a 50% reduction in the onboarding fee, or $5000. For that transaction each token would represent a cost saving of $100, and they are currently on sale* at $0.65 per token (going up in increments to $2.00 until the sale ends on 4 July — details are in the white paper).

We think this will be popular.

VINAY GUPTA Mattereum Founder and CEO

Find out more about Mattereum GmbH’s token sale*.

*The Mattereum Discount Token (MATR) is available for purchase through Mattereum GmbH’s fully regulated German crypto exchange partner, Swarm. Buying MATR is subject to terms and conditions in eligible jurisdictions — in particular, residents of the United Kingdom and the United States of America are excluded from the public sale of MATR.

PERMANENT SUMMER: THE NEW MATR TOKEN…And Why The RWA Bull Market Goes On Forever* was originally published in Mattereum - Humanizing the Singularity on Medium, where people are continuing the conversation by highlighting and responding to this story.

In my last piece on this subject I explored how young people are searching for community and identity online, either through aesthetics like Cottagecore, or through economics, with things like DAOs and how, as a result, they had been captured by a brutal and isolating form of “pay-to-play tribalism”. Instead of finding the true utopian community that provides “food, fire and friends beside water” their interactions have been atomized and monetized by the neoliberal hegemony. I have thoughts on how to fix that….

So, how do we fix that? It’s not easy, and there are lots of inherent problems to navigate.

Let’s start with thinking about the discourse between the people running DAOs and the people running old-school incorporated cooperatives in the conventional nation state system.

Cooperatives have worked for centuries, at enormous and truly revolutionary scale. There was a time when so much of the British economy was going to coops that the State started to suppress them to try and maintain the existing feudal-capitalist power structure. How did coops work? Basically the administrative systems of feudal capitalism, owned by the people.

Cooperatives have worked for centuries

Now this is, I think, an important distinction. The coops were not new administrative structures. Paper records, bookkeepers, shopkeepers, money, trade — it was all the same processes — but:

1) without extractive profit making

2) accountable to service users, not a faceless Lord

So we have the same structure as the capitalism of the era in terms of the business processes but different owners. This is informative. The innovation is in power but not necessarily in process. Same processes serving different masters.

We have the same structure as the capitalism but different owners

This is in sharp contrast to Free Software. Free Software is why we have Linux, Wikipedia, and Open Source. It started as a revolutionary movement which stated that software users had human rights. It expressed those human rights in the form of a binding legal licence applied to software distributors

Free Software was started by the most likely deeply autistic, and slightly frightening, Richard Stallman. I find that he’s become scary weird as he’s aged. Stallman wrote a staggering amount of software, consulted with lawyers, and gave it away under a licence agreement which enforced human rights. Stallman’s use of software licensing to enforce human rights is a stunning creative leap. It’s the kind of constitutional brilliance on which great nations are founded. He was shivved in the back by the capitalists, who took the economics of free software and stripped rights. You know this movement as the Open Source movement. Open Source took the collective, collaborative economics of Free Software — economics intended to deliver a commons in which human rights were respected — and took out the human rights.

We live in the shell of a dead revolution

It’s worth going back and reading about the Free Software vs. Open Source split — the personality types will be familiar to anybody from the blockchain space. The Bitcoin / Ethereum split — where Bitcoin refuses to evolve smart contracts — is kinda similar. This stuff is prehistory, but the corporate capture of Free Software, stripping out the human rights stuff, and creation of Open Source as a shallow imitation of a revolution ought to be of interest to all blockchain people.

Sounds like Central Bank Digital Currency (CBDC), yes?

This stuff is the real political history of the high tech age. Richard Stallman is our Jefferson, our Gandhi. He’s the one who did the key foundational thinking about human rights in the age of technology. A lot of you have never heard of him and this is not by accident, OK?

You have never heard of Richard Stallman, and this is not by accident

So what I want to point out here is the dynamics where revolutionary cultural innovations are stripped of the elements which empower ordinary people, and then co-opted by capitalism or feudalism or whatever form power takes at the moment. Blockchain people do have this fear too. Elsewhere, I’ve talked about the dire need to reform the blockchain and bring in ways to purge it of rampant scamming. If we don’t, that’s what will happen; everything we value about it will be stripped out and the husk co-opted by the established hegemony for uses it was never meant for and of which its originators do not approve.

So let’s go back to young folks and DAOs. The dream is simple: economic and cultural empowerment through new mechanisms for effective collective action. Community that really works for people. Everybody puts their money into a bucket. They vote on how the money is used. Revolutionary stuff gets done. Money flows back.

What DAOs have found in practice are all the same human-nature problems which plague cooperatives:

1) members are passive

2) managers wind up doing all the work, and getting all the power as a result

3) wasting other people’s money is easier than watching it closely

Manageable? Maybe. DAOs with seriously activist membership are theoretically possible but it’s like looking for political parties where the entire membership are actively engaged in policy debates. Rather than what we get in practice: people just show up to vote and otherwise live their life. And so we wind up with the Principal-Agent Problem (PAP)

The people working on your behalf to manage your DAOs or coops or banks turn out to be working on their behalf not yours. They know the business better than you too, so they’re super hard to watch. Something very complicated and subtle happens here. We inject an ultra low transaction cost environment with the potential for very, very cheap audits and tight control of administrators via smart contracts into a known-difficult area of human affairs

The managers turn out to be working on their behalf not yours

What changes? Solution? Well, certainly not so far. The various governance and management problems of DAOs are pretty well known. The archetype is that even the well-governed and well-managed DAOs are either:

1) run by three people in a pub running the multisig, or

2) clueless popularity contests for $

This has clear parallels with all sorts of similar problems too: DAOs and holders, voters and representatives, shareholders and management, supporters and team owners, fans and record companies, and so on. Experts with power do what they can get away with; or “the people” are in charge, but clueless.

Can this problem be fixed with technology?

Efficient, transparent administration watched over by an activist population that takes the time to understand the issues and expresses their political power consistently and coherently?

Never going to happen. Not a thing.

So now what?

Let me just double down on this for a moment. The Principal-Agent problem is an unsolved repeating pattern in human society from the beginning of time. DAOs simply restate that problem in a new way with new tools, but nothing about those tools presents a solution to the PAP. The blockchain presents a pretty decent solution for the CAP Theorem (a fundamental problem in distributed systems engineering) but it does not obviously present a solution to the PAP. I think we need to face this head on: we can get to the PAP in record time, but THEN WHAT?

DAOs simply restate that problem in a new way

Let me link to an old thread about “Meditations on Moloch” which looks at Moloch as the dark god of zero sum games, in particular iterated zero sum games, and why Moloch is a worse problem now than in previous ages. The perspective is that fundamentally Moloch is a thing humans have always managed to defeat by changing culture.

David Graber and David Wengrow looked at the archaeological and anthropological evidence for social evolution and culture change in The Dawn of Everything and showed we lived in large, complex, but decentralised communities for millennia and that the current centralised, capitalist, nation state is not inevitable; all kinds of other structures have worked just as well, if not better, for humans. They also found that repeatedly humans have turned their back on ways of managing communities that no longer work, reinventing structures and systems so that they suit people better, usually without violent upheaval and revolution. This is the kind of thing we need to do again, and the blockchain gives us one way of doing it.

Repeatedly humans have turned their back on ways of managing communities that no longer work

We need to look at DAOs and the rest of it in the context of a response to a Moloch-type lock-in where the global economy is stacked by the Boomers against the young, and stacked by everybody against future generations because of climate change.

A simple NFT drop with no further involvement from the team gets rid of the Principal-Agent Problem by not having Agents. Each person owns their NFTs. They’re in it together, alone. Community etc. are “soft” not administrative. But if those NFTs are being used as a way of fundraising for something like a video game or a cartoon show something changes. The NFTs represent property which is made more valuable depending on the success/failure of the Agents — the owners of the brand who are continuing to work. This probably has some interesting implications for securities law down the line but I’m going to leave that can of worms to the lawyers. It’s a hard problem no-doubt. Ditto ERC20 type tokens or shitcoins: here there’s almost always a principal-agent factor, a team working.

DAOs have split functions.

1) They’re social anchors: people buy into the group and so will stick around. People can invest in getting to know each-other.

2) They’re profit-making enterprises with Principal-Agent problems.

This is where they fail as social organisations, they are enabling that “pay to play tribalism” that gives the illusion of community, but in fact opens participants to rapacious exploitation. So what does it take to provide buy-in tribalism without having the Principal-Agent Problem turn into members being exploited by their administrators?

The answer would be to remove the agents from communities. Issue 200 seats or whatever. No more will be issued. No further work. You literally wind up with collectible badges: 200 seats here, 500 seats there. The seats become more valuable or useful, they change hands. But “useful” can’t refer to central services offered by administrators acting as agents for the holders. It can’t be a fundraising thing.

The answer would be to remove the agents from communities

Ironically I think something very clever could be done by selling seats in some kind of scheme where the proceeds of the sale are split *equally* among all the people that bought in. The folks who buy in early do better financially. Those who buy in later do worse. But 0 agents. And that approach leaves no kitty to be managed: scarcity is demonstrated on the buy-in, but after that the token’s paid for and you get your cut of the proceeds. I don’t know if that would work in practice, but it’s a way of issuing scarce badges for money without creating PAP.

And if the DAOs and NFTs are about creating small communities in an endless anonymous sea of the internet, maybe that function should be strictly separated from the economics of Ponzi schemes and starting investment funds together. Because binding these together is a problem. You can easily see how it happened: economic necessity, Ponziconomies, and social isolation resulting in a fusion of team-and-tribe into a Strong Bond which then just causes a ton of common PAP problems: fraud, incompetence and laziness from agents & apathy from membership.

Can we take the “cult” out of subculture?

Because if you think it’s bad with DAOs and NFT projects, wait until you see the social fallout from failed Network State projects. It’s all the same social dynamics, but now with real estate and law in the mix.

I don’t mean to be a Luddite here, or anti Weird Futurist Culture, but I think we have a predictable set of problems here and “let 1000 flowers bloom” does not help when they are weeds growing on toxic brownfield soil.

The combination of social solidarity and commerce is unsafe, which takes us back to the Cooperative movement and the Labour unions. With an educated and engaged population these institutions thrived. But as people became depoliticised and disengaged, unions turned into corrupt corporations and the coops diminished into shops.

The combination of social solidarity and commerce is unsafe

To go forward, we need to decisively separate the commercial from the social. We need to have clear rules, we need law so that when agreements are made, their basis is clear, and so that when someone buys or sells something it is clear what is being bought and sold to and by whom. The combination of the blockchain and what we are doing at Mattereum makes this possible.

We need to decisively separate the commercial from the social

The outcome is a situation where the community building can go on independently of money games because people are no longer relying on charming and exploiting other community members to extract money from them. It puts a stop to the zero sum game, where for every winner there has to be a loser, and makes the whole space deeply unappealing for scammers. Communities are built on trust, and clear rules and fair processes build that trust. DAOs have the potential to be the basis for the kind of community people yearn for, but the governance needs to be sorted out, to separate the grift from the community and lay down the bedrock of trust on which to build.

Mattereum’s purpose is to build the structures that make eradicating grift and building community possible, and we’ll keep doing it. We need a better world and if we have the power to help make that happen, we need to use it.

HOW THE BLOCKCHAIN CAN SAVE THE YOUNG (from themselves) was originally published in Mattereum - Humanizing the Singularity on Medium, where people are continuing the conversation by highlighting and responding to this story.

The Tenth of January saw a landmark for the crypto industry, with the US Securities and Exchange Commission (SEC) approving 11 US-listed exchange-traded funds (ETF) that track Bitcoin. While the SEC appears to have been rather grudging about this, primly pointing out that they remained skeptical about cryptocurrencies, it nonetheless represents a major step forward for crypto and is a sign of a maturing ecosystem, which Mattereum can only welcome.

So, why is this so important? Well, for a start, it is the first time in ages that the SEC has done anything remotely positive towards crypto, but more than that, it represents a further step into the financial mainstream for cryptocurrency. Mattereum is based on the belief that there is more to the blockchain than an opportunity for grift, hype, bubbles and get-rich-quick scams; that the underlying infrastructure is sound and has huge potential for being the basis for international trade in the future.

The ETF ruling is important because what an ETF does is allow people to invest in assets or groups of assets without having to directly purchase the assets themselves. For Bitcoin, what this means is that instead of needing to have your own digital wallet, or an account on a crypto trading platform you can invest in an ETF based on Bitcoin, run by an investment fund. This immediately widens the market to people who like the potential returns of Bitcoin investment, but who have been put off so far by either the technical requirements of buying Bitcoin themselves, or the appalling reputation for instability and outright fraud that crypto exchanges have earned. ETFs mean that people can now invest in crypto through established fund managers like Fidelity and BlackRock, plus funds can easily trade ETFs on stock exchanges, which has not been possible for crypto before.

While this is great, investment analysts are voicing concern about crypto ETFs. They believe these could put too much risk and volatility into Americans’ retirement accounts, given that the price of bitcoin is prone to wild fluctuations, often without warning and for reasons that are not immediately clear. Yiannis Giokas, senior director of Moody’s Analytics has been quoted as saying “The notorious price volatility of bitcoin … could expose mainstream investors to a less familiar spectrum of investment risks”. This is a weakness of pure crypto as an investment vehicle, but fortunately there are other options on the horizon.

It has been clear for some time that the mature use case for the blockchain is for trading real world assets (RWA), not for running a limited currency. Bitcoin chose not to evolve into a system that could run smart contracts, so Ethereum (ETH) was developed to meet that need. On ETH and similar chains it is possible to tokenize and fractionize RWAs and trade them on chain. While Bitcoin ETF are definitely a step forward, they are a relatively small one in the grander scheme of things, it is on chain RWA that have the greatest potential for the future. Starting with high value assets like gold and real estate, tokenization increases liquidity and hugely simplifies what are currently complex and lengthy transactions, which will open the market in such things to far more people than the relatively niche Bitcoin ETF will. RWA have the potential to hugely smooth and accelerate international trade, which will have a far greater impact in the long term. Ultimately, I would suggest, it is investment in RWA and in tokens issued by key RWA players that will have the biggest effect over time. It is good to see Bitcoin ETF bringing crypto into the mainstream, but it will be the RWA that follow that enable the blockchain to revolutionise business going forward.

Mattereum has worked hard and invested millions in developing unique and innovative lawtech solutions to make that possible. The Perez Cycle maps the development of new technologies, and shows that they go through a period of rapid growth driven by hype and often disreputable actors that creates a bubble, and when this bursts, the technology goes through a period of being seen as radioactively disreputable before any underlying functionality is adopted by mature users and put to work for successful, unflashy, purposes that finally generate real value. We have seen the blockchain go through hype, boom and bust and the ETF approval is one of the first major signs that we are now moving into the next phase, where we see it being taken up by more sober users and taking its place in the financial mainstream. Mattereum sees itself as one of those users.

To this end, Mattereum’s innovations are specifically designed to reinforce the value of RWAs by providing the missing link in the system — a means to legally tie the on-chain token representing the RWA to the physical asset itself, so that ownership can be defended in court in 172 jurisdictions worldwide. With this, almost any asset, physical or virtual, can be traded on chain, with both parties secure in the knowledge that ownership is clear and uncontestable. This is the revolution that is coming, and Bitcoin’s new-found respectability is paving the way.

The Bitcoin ETH ruling is great — but it is just a taste of what is to come with RWA.

The Bitcoin ETF takes crypto assets and dresses them in the clothes of tradfi financial assets: shares in a fund, where the fund owns a bunch of bitcoin. The fund shares then trade on an exchange: it’s literally an Exchange Traded Fund.

But in the reverse direction, Mattereum will take real world assets like gold bars and apartments — tradfi assets if you will — and dresses them in the clothes of defi financial assets: NFTs and ERC20 fractional ownership tokens.

This two way traffic between the tradfi and defi world can only benefit both worlds. Defi needs the sheer volume of the real world assets. Tradfi desperately needs transparency, openness, efficiency, and above all innovation, to better finance the world’s need for goods and services.

As defi and tradfi learn how to work together we can build a new system with the best features of both.

THE BITCOIN ETF RULING OPENS THE DOORS FOR THE MAINSTREAM BLOCKCHAIN was originally published in Mattereum - Humanizing the Singularity on Medium, where people are continuing the conversation by highlighting and responding to this story.