Physical Assets
Transcript By: Bryan Bishop
Physical assets, archival science
We are going to spend 20 minutes talkign about the topics. Then we will spend 10 minutes getting summaries. Then we will spend 20 minutes summarizing everything.
Why is archival science important? I have a background in finance too. Blockchain securitizes things as well. It combines value and memory in one. Also, people have studied archives and how to get records and how to store records.
Hashkloud. Identity verification and KYC and AML management platform. We are now talking to Internet of services. We are linking identities to internet of services. That’s what we do. Potassium cloud.
Corporate accountant working with ledgers and traditional IT. the next step is to make ledgers public and/or private and start looking at hyperledger project.
Blockchain as a service (BT).
Chief technologist of Boston University. Interoperability is important for data records. Keenly interested in record keeping. Eportfolio, e-folder. They are situationally based around a university. Portfolios are often not transferred. My goal is to eliminate data. Healthcare industry has the same problem. The notion of proof is important, like when a degree is conferred. Microcredentials. When you get a cert for teaching, you get the cert but als oa microcredential, not on a blockchain but on a homegrown system. Accredition systems can use InCommon… instead of checking each degree, what about checking bulk? If people don’t verify whether the degree is real, then what does it matter? Well, they should check with only one central system perhaps.
There is a web of trust where the inkages have to persist. I don’t hear conversations about persisting the linkages. When the underlying in a derivatives contract goes bad, you need a way to create a persistent linkage to the underlying and know from a risk analysis to know how healthy the nuderlying is.
let’s say you’re talking about student records. If you take the premise that those are not stored on-chain, then you need an ecosystem that stores those. Either the person that it refers to would store that data, or the institution would store the data. Where should the risk and liability be pushed to? Perhaps the edges and margins. Maybe that’s cloud. Maybe that’s IPFS. It’s debatable. Storage location is one detail. Then you have the hash, which authenticates the thing. Chain-of-custody. Trust roots. When they become old, you have to roll over the certs.
Controversial statement 1: perhaps the only way to do this is with legal means.
Controversial statement 2: hashing everything and placing into the blockchain might not be useful.
We should pick just one asset to talk about. How about real estate. The blockchain is not authenticating the land. It’s the title to the land. The record refers to the physical asset. The blockchan hash to the record representation. There’s two linkages. One from the record to the physical asset, and one from the hash on the blockchain to the original record that it is authenticating. What you put on the blockchain is on the hash. It’s a one-way hash. You can’t reverse a hash to get the original record. In terms of transfer of asset, you still need to hold on to the original title.
Legislation for the land title registry. The record representation of the land, and then you can have smart contracts that are executed on the blockchain, then that’s where you have the record existing on the blockchain.
Legal binding supports the psychological binding. Psychologically, physically this is not much but a Macbook Air. It’s a psychological binding in each of our minds. It’s not physical linkage. It’s a psychological linkage that this is my property. For everyone to have the same psychological linkage, a legal system can be used. In estonia, they have digital citizenship. Someone’s identity is truly digital. You can use digital signatures. If an authority decides to do this, it’s easy.
Will another country recognize land registry transactions on a blockchain?
I confer citizenship on children. There is some level of persistence to what is recorded there. The linkages are perhaps not as persistent. For example, certificates and digital signatures. Estonia has a big problem with expired digital signatures and certificates. They have to roll over. Right now they are not dealing with certificate expiry. In Sweden, they have a problem with expired medical records. What are the options around expired medical records? is it important to roll over those records? How much authenticity do you need?
Australia’s exchanges have automated everything. The next state that they are thinking about is putting their property into the blockchain. It’s a hash of the property. You have to come up with metadata. It’s an address, a name, whatever. So what’s the minimum viable data to hash? How do you describe a real estate? How do you define the residential real estate? You standardize this data first. The data is the zone, gps positioning, and then the land registry in Australia creates the data object, and puts the hash in the blockchain. They are the custodian of the data. The property is built on that land. So first you have to put the land into the blockchain. That is the digital identity of the property. One problem solved. It’s a tokenization of land property.
What is blockchain specific about this? It’s tokenization. When a blockchain comes into the picture, where I clam that I am an owner of the property. So then how do you link it? How do I link myself to this? Who links it? Call up the land registry, tell them what your public key is. Where is the added value in using a land registry on the blockchain? It presents different risks. How can I break this system to make it robust? With tokenization perhaps you can prevent corruption where people steal land from people who own it.
One of the points we should pull out is that we should have exact same technology in different settings. If the institutions and legal systems are different, and the meaning of the transaction and your ability to rely on it, is going to be different. I think this is a very important point. It brings durability into that structure. At the moment it can be difficult to find a durable record.
There are websites that help with, but nothing that automatically does, certified public accountant lookups. Public company oversight board registers a list of CPAs. SEC keeps a list of auditors as well. When a company files an audit report, it would be great if there was a system where you could check if the auditor’s report is on the right document with the right hash. Perhaps this is a lack of technology development funding. But there is no indication that any of those organizations want to work together anyway.
If we are going to rely on blockchain as a system of record, there have been record-keeping systems through time. We are seeing it operate realistically, for the real-estate system as described. Previously there were standards for electronic document management systems. Might need a document record keeping standard for blockchains. Here are the attributes of the system, here are the functional requirements of the system in order for me to place my trust on this system and its linkages.
What’s the difference to a database? Well, network effects. And career reputational benefits. We have many different record systems, like at healthcare institutions, colleges, universities, and many other institutions that are all trying to do the same thing, and without the network effects there’s not enough technical investment available to update their systems. And auditing. Having a real estate system where you use side-rails where you also use a digital transaction, then you could argue that this gives larger access to a pool of liquidity and capital, which is further incentive to use this sort of system. The same with auditing– where maybe you only have certain exchanges that exclusively list companies that have better auditing. Credit rating agencies could perhaps weigh in on this.