Great post. I've long been interested in using Ethereum to represent commercial real estate assets, an particularly to represent the cash flows they generate. In this model, a unit would represented as an NFT, and distributions/dividends would be linked to those units as transactions in dollar-denominated stablecoins.
Once you have enough assets on chain, and a history of distributions, it starts to look something akin to the stock market, where each stock has a history of earnings you can use to value it for trading. Importantly, that history of earnings is backed by enforceable legal mechanisms which rely on legal artifacts like 10-Q filings.
I still think this is a good use case and am working on a project to make it real. The challenge is that real estate investing is... pretty boring? Most real estate doesn't double or halve in value overnight. The relative lack of volatility is part of why real estate is such an attractive asset.
Trillions of dollars are locked up in real estate, but it's practically impossible to liquidate interest without selling the entire asset. Refinancing is an option in some cases but it's expensive and slow.
There's a lot of practical utility for this model, but it's not "when moon?" useful, so it's hard to get crypto bros to look at it seriously.
Thanks for helping me see the obvious Brett. A lot of what seems to make all this work is exactly the fuzziness and vagueness, that then needs trust (as non-critical acceptance) and some social financial imaginary to work. So I think the one thing that really stays out of view is the value of that imaginary. But maybe that's what you mean by 'belief system'. Think there is a slight difference perhaps
In a crypto exchange like Binance Bitcoin, and to a lesser extent, Ethereum and BNB play the role of 'money' because other tokens are priced in them and paired with them. Also because it is a market, the language of 'buy' and 'sell' is used, appropriately I think. I have BTC, I want say, XRP, I will 'buy' XRP with BTC in a market in which BTC is the quote asset and XRP the base asset. In these markets, the quote asset serves as both a medium of exchange, and measure of value and seems to me to be nearly as much 'money' as dollars in say, oil markets.
For me therefore, what serves as money can be seen as context dependent.
Super helpful Brett! Are you going to be covering Mutual Credit Systems in depth soon? You have referred to them a lot in your various articles and videos but I can't find a dedicated article to them.
In TradeLayer we don't have a protocol fee for indivisible tokens (e.g. NFTs) because it's not practical, and if you trade them for LTC or another NFT it's 0 protocol fee.
The reasoning for this is that there must be some underlying fungible money in the system to server as a medium for secured loans against the illiquid assets, but what you're suggesting is someone could make an app that scans for bulletin board notices of comparable value, perhaps chains of them, and then makes a series of trades in order to barter around and possibly bypass fungible liquid currency in the process.
While it would be cashflow neutral for the layer protocol, it's cashflow positive for the underlying chain because it still produces tx fees. You could RGB NFTs on LN, maybe get it more efficient and avoid base layer.
In conclusion: we welcome the possibility of a strange new world facilitated by hyper-barter and possibly social networking and geographic coincidences. If people use this loophole in TradeLayer to countertrade for 0 fees, godspeed, let's see how big it gets.
it's just a very slight observation, but it may be significant: you've chosen a shovel to illustrate a spade. It is, in fact, very difficult to dig with a shovel due to the angle at which the shaft of the handle joins the shovel iron. Just a small point, but something could be made out it, perhaps.
I'm thinking now that it might not be impossible to find some safe way for merchants to be paid for products and services with numbers represented electronically, similar to how they can be paid with numbers stamped on metal discs and printed on paper rectangles, but it looks to me like Nakamoto didn't think it through far enough, if that's really what he was aiming for. The reason that merchants accept coins and paper money is because they can turn around and use those for some products and services offered by others, and it goes around in a circle. It might not be impossible for that to happen with numbers represented electronically, but it might take more than hopes, wishes, and fairy tales for that to ever happen, and I don't see Nakamoto ever discussing that issue. It looks to me like he was focused exclusively on a safe way for merchants to be paid online for products and services, directly from customers, without going through any third party, and without the risk of payments being retracted. It looks to me like he was only concerned about the interests of merchants, how they could be paid without the inconveniences and costs of third-party processing; and not at all about the interests of customers and clients. He might not care at all about how much people are being fooled into gambling their money away in Bitcoin trading, if Bitcoin is being used sometimes by merchants for what he said it was for, and if that was actually what he was aiming for.
I've been reading Nakamoto's posts in the list where he first discussed his project. I'm not sure I know what he was thinking, but I have an idea of what he *might* have been thinking, and what a lot of people might be thinking now. One way or another we've learned to think of the usefulness of some metal discs and some paper rectangles with numbers on them, as being useful purely because of a voluntary and/or government-imposed agreement to accept them as payments for products, services and debts, without anyone thinking that they have any usefulness in themselves, or that there is anything else backing them up, apart from that agreement. Sometimes that might lead to thinking, or believing people saying, that maybe any number of people could use numbers on the Internet, with each other, in all the same ways we use coins and paper money, and that someone has found a way to do that. Nakamoto *might* have thought that he had found a way for that to happen, and a lot of people might just believe other people saying that crypto was invented for that purpose and will actually work that way some day, if ever enough people agree to it. There's a feeling like "why can't there be a way of doing something with numbers on the Internet, that works just as well as stamping them on metal disks and printing them on paper rectangles?" That might be part of what makes it so easy to pass it off as "coins" and "currency." Nakamoto never compared it to raw precious metals. He called it "cash" and "coins," and proposed it as an alternative to existing online payment systems. Alternative, not replacement. I don't think that he was actually anti-fiat or anti-government, but he might have thought that appealing to those interests would help make the idea popular. It looks to me like all he cared about, or what he wanted people to think he cared about, was a safe way for people to be paid online for products and services, directly from other people without going through some third party, like they can offline with cash. He wasn't the first one who tried to do that, but he improved enough on previous projects, and his project had enough support and good luck that projects hijacking or imitating his have survived longer than any of the previous projects did, not as safe ways to be paid for products and services, but to serve the same purpose as sub-prime mortgage loans did in the past. Not saying that will necessarily end the same way. Just that what people are doing with crypto looks mostly like that to me. Also, I see NFTs in online games as a way of training more people of all ages to gamble away their money and/or their parents' money, in crypto trading.
Great post. I've long been interested in using Ethereum to represent commercial real estate assets, an particularly to represent the cash flows they generate. In this model, a unit would represented as an NFT, and distributions/dividends would be linked to those units as transactions in dollar-denominated stablecoins.
Once you have enough assets on chain, and a history of distributions, it starts to look something akin to the stock market, where each stock has a history of earnings you can use to value it for trading. Importantly, that history of earnings is backed by enforceable legal mechanisms which rely on legal artifacts like 10-Q filings.
I still think this is a good use case and am working on a project to make it real. The challenge is that real estate investing is... pretty boring? Most real estate doesn't double or halve in value overnight. The relative lack of volatility is part of why real estate is such an attractive asset.
Trillions of dollars are locked up in real estate, but it's practically impossible to liquidate interest without selling the entire asset. Refinancing is an option in some cases but it's expensive and slow.
There's a lot of practical utility for this model, but it's not "when moon?" useful, so it's hard to get crypto bros to look at it seriously.
this was great!
Thanks for helping me see the obvious Brett. A lot of what seems to make all this work is exactly the fuzziness and vagueness, that then needs trust (as non-critical acceptance) and some social financial imaginary to work. So I think the one thing that really stays out of view is the value of that imaginary. But maybe that's what you mean by 'belief system'. Think there is a slight difference perhaps
In a crypto exchange like Binance Bitcoin, and to a lesser extent, Ethereum and BNB play the role of 'money' because other tokens are priced in them and paired with them. Also because it is a market, the language of 'buy' and 'sell' is used, appropriately I think. I have BTC, I want say, XRP, I will 'buy' XRP with BTC in a market in which BTC is the quote asset and XRP the base asset. In these markets, the quote asset serves as both a medium of exchange, and measure of value and seems to me to be nearly as much 'money' as dollars in say, oil markets.
For me therefore, what serves as money can be seen as context dependent.
Super helpful Brett! Are you going to be covering Mutual Credit Systems in depth soon? You have referred to them a lot in your various articles and videos but I can't find a dedicated article to them.
In TradeLayer we don't have a protocol fee for indivisible tokens (e.g. NFTs) because it's not practical, and if you trade them for LTC or another NFT it's 0 protocol fee.
The reasoning for this is that there must be some underlying fungible money in the system to server as a medium for secured loans against the illiquid assets, but what you're suggesting is someone could make an app that scans for bulletin board notices of comparable value, perhaps chains of them, and then makes a series of trades in order to barter around and possibly bypass fungible liquid currency in the process.
While it would be cashflow neutral for the layer protocol, it's cashflow positive for the underlying chain because it still produces tx fees. You could RGB NFTs on LN, maybe get it more efficient and avoid base layer.
In conclusion: we welcome the possibility of a strange new world facilitated by hyper-barter and possibly social networking and geographic coincidences. If people use this loophole in TradeLayer to countertrade for 0 fees, godspeed, let's see how big it gets.
it's just a very slight observation, but it may be significant: you've chosen a shovel to illustrate a spade. It is, in fact, very difficult to dig with a shovel due to the angle at which the shaft of the handle joins the shovel iron. Just a small point, but something could be made out it, perhaps.
Cryptos are electronic gambling tokens. Good luck paying your taxes with them ...
I'm thinking now that it might not be impossible to find some safe way for merchants to be paid for products and services with numbers represented electronically, similar to how they can be paid with numbers stamped on metal discs and printed on paper rectangles, but it looks to me like Nakamoto didn't think it through far enough, if that's really what he was aiming for. The reason that merchants accept coins and paper money is because they can turn around and use those for some products and services offered by others, and it goes around in a circle. It might not be impossible for that to happen with numbers represented electronically, but it might take more than hopes, wishes, and fairy tales for that to ever happen, and I don't see Nakamoto ever discussing that issue. It looks to me like he was focused exclusively on a safe way for merchants to be paid online for products and services, directly from customers, without going through any third party, and without the risk of payments being retracted. It looks to me like he was only concerned about the interests of merchants, how they could be paid without the inconveniences and costs of third-party processing; and not at all about the interests of customers and clients. He might not care at all about how much people are being fooled into gambling their money away in Bitcoin trading, if Bitcoin is being used sometimes by merchants for what he said it was for, and if that was actually what he was aiming for.
I've been reading Nakamoto's posts in the list where he first discussed his project. I'm not sure I know what he was thinking, but I have an idea of what he *might* have been thinking, and what a lot of people might be thinking now. One way or another we've learned to think of the usefulness of some metal discs and some paper rectangles with numbers on them, as being useful purely because of a voluntary and/or government-imposed agreement to accept them as payments for products, services and debts, without anyone thinking that they have any usefulness in themselves, or that there is anything else backing them up, apart from that agreement. Sometimes that might lead to thinking, or believing people saying, that maybe any number of people could use numbers on the Internet, with each other, in all the same ways we use coins and paper money, and that someone has found a way to do that. Nakamoto *might* have thought that he had found a way for that to happen, and a lot of people might just believe other people saying that crypto was invented for that purpose and will actually work that way some day, if ever enough people agree to it. There's a feeling like "why can't there be a way of doing something with numbers on the Internet, that works just as well as stamping them on metal disks and printing them on paper rectangles?" That might be part of what makes it so easy to pass it off as "coins" and "currency." Nakamoto never compared it to raw precious metals. He called it "cash" and "coins," and proposed it as an alternative to existing online payment systems. Alternative, not replacement. I don't think that he was actually anti-fiat or anti-government, but he might have thought that appealing to those interests would help make the idea popular. It looks to me like all he cared about, or what he wanted people to think he cared about, was a safe way for people to be paid online for products and services, directly from other people without going through some third party, like they can offline with cash. He wasn't the first one who tried to do that, but he improved enough on previous projects, and his project had enough support and good luck that projects hijacking or imitating his have survived longer than any of the previous projects did, not as safe ways to be paid for products and services, but to serve the same purpose as sub-prime mortgage loans did in the past. Not saying that will necessarily end the same way. Just that what people are doing with crypto looks mostly like that to me. Also, I see NFTs in online games as a way of training more people of all ages to gamble away their money and/or their parents' money, in crypto trading.