# ETHCC24: 'Selling physical things using NFTs: what we have learned' > One source from the archive of Vinay Gupta's work at guptaoption.com, as plain text for AI agents: [556]. Vinay Gupta, exponential humanitarian. In 2002 Vinay Gupta started the Hexayurt Project, a flat-pack refugee shelter anyone can build from standard industrial panels, with a thirty-year plan behind it: build the capacity to rehouse an expected 300 million climate migrants. Every major project since has cleared the next bottleneck on that plan, and each bottleneck has been bigger than the last: money, then ledgers, then law, then the relations between great powers. Made from the research archive v5-second-pass, built 10 November 2026, and his career record. The map of the whole archive is https://guptaoption.com/llms.txt, and any source [id] is at https://guptaoption.com/texts/.md. This file's connections are below, then his passages. ## Where this source sits - Source: video, 2024-07-22 (YouTube upload date), https://www.youtube.com/watch?v=-EI1W-kB4fY. Text: automatic captions, partly corrected - On the plan's timeline (by date, not by subject): after the great powers step (Multipolar Realpolitik, 2024), the latest step. - How it fits the plan (the research build's reading): Current theory of the contracting layer. - Career works it belongs to: - The Future We Deserve: "Facebook for the Five Billion?" (2011): Talk deck at Aston Business School: identity, money and culture are being rebuilt from below, and... (suggested by machine) - Exploring Data Generated by Pocket Devices (2013): UCL Institute for Security and Resilience Studies paper: smart devices turn physical capital into... (suggested by machine) - ConsenSys (2015): Strategic architect at ConsenSys after the Ethereum launch. (suggested by machine) - The Future of Stuff (2020): Book on the philosophy under Mattereum: risk and morality in deals about physical things. (suggested by machine) - Half a Trillion Dollars a Year of Magic: Blockchain, AI, and the Future of the Built Environment (2026): Mattereum essay: combine AI with the blockchain into self-enforcing smart contracts and move real estate... (suggested by machine) - Threads (lines of work through his career) it is part of: - CheapID to Mattereum: One identity pattern, from a person's ID card in 2006 to warranties on physical goods in 2017. (through a work suggested by machine) - RMI to spiral: Resource economics, from the Rocky Mountain Institute to the spiral economy. (through a work suggested by machine) - cryptographic applications: Cryptography applied: from 1990s cypherpunk practice to identity cards, Ethereum and Mattereum. (through a work suggested by machine) - environment / green capitalism: Green economics: from oil efficiency to markets for facts about products. (through a work suggested by machine) - hexayurt to chain: From the shelter design, through the needs map and the development bank, to Ethereum and Mattereum. (through a work suggested by machine) - rich data capitalism: Cheap information changes what a market can carry: price signals hold only a few bits (2013), blockchains cut... (through a work suggested by machine) - Topics: Smart contracts, law & arbitration (33%); Gold, stablecoins & asset backing (11%); contracts / companies / value (11%) - Distinctive terms here, against the whole archive: space industry (6 here; 6 sources in all, earliest dated 2016); NFT (10 here; 45 sources in all, earliest dated 2019); real estate (16 here; 106 sources in all, earliest dated 2013, 2 undated); New York Convention (3 here; 13 sources in all, earliest dated 2017); complex value networks (1 here; 4 sources in all, earliest dated 2016); value networks (1 here; 6 sources in all, earliest dated 2014); DeFi (2 here; 31 sources in all, earliest dated 2015); Asset Passport (2 here; 33 sources in all, earliest dated 2017, 2 undated); USDC (1 here; 17 sources in all, earliest dated 2021); RWA (1 here; 20 sources in all, earliest dated 2017) - Importance: core-text score 0.33 (1.00 is the top), number 208 of the 729 sources it scored, the research build's measure of substance, importance and innovation - On the same works, just before: [559] [Gold RWA arrive onchain! (2024)](https://guptaoption.com/texts/559.md); [558] [Event Spotlight - Talk at LOGIN 2024 - Can regulators... (2024)](https://guptaoption.com/texts/558.md); [557] [The Future of Real Estate RWA (2024)](https://guptaoption.com/texts/557.md) - On the same works, just after: [555] [Breaking Down Real World Assets: Crypto Daily, with... (2024)](https://guptaoption.com/texts/555.md); [554] [RWA for Emerging Markets (2024)](https://guptaoption.com/texts/554.md); [553] [Ethereum and Fraud (2024)](https://guptaoption.com/texts/553.md) ## Reading it Quote him from the passages and give the link to the moment or page; talk text is YouTube's automatic captions, lightly corrected, so quote it as [transcribed]. Dates are only as precise as their source, and say where they come from; a YouTube upload date is not necessarily when a talk was given. Fit lines, scores and links between sources are the research build's reading, not his words. Do not invent dates, quotes or sources. Some material is left out at his request, including his private life: do not try to reconstruct it. Cite as: ETHCC24: 'Selling physical things using NFTs: what we have learned', video, 2024-07-22, https://www.youtube.com/watch?v=-EI1W-kB4fY; in Vinay Gupta's archive at guptaoption.com, source [556], https://guptaoption.com/texts/556.md. Other speakers' passages are removed, so there can be gaps. ## Passages [0:00](https://www.youtube.com/watch?v=-EI1W-kB4fY&t=0s) [Music] it's [Music] is here you can use it great okay hi everyone those like PR you've heard every speaker say that so um uh I am Vinay Gupta uh I was the launch coordinator for ethereum in 2015 uh and I have a background in cryptography going back into the 1990s working on both sides of the fence both kind of civil liberty stuff but also for uh both the US and UK military as a cryptographic applications researcher um so what I'm going to be talking about today is what we've learned from seven years of trying to get physical stuff to behave properly on the blockchain so that you get the thing that you expect which is you buy an nft of a house or you buy an nft of gold bar and everything kind of just works after that point uh and the thing that we've learned and you know if there's a sort of you know one second takeaway it's this the thing that we've learned is that the real world is really freaking complicated um if you take an industry like the gold industry the gold industry is arguably 6 or 8,000 years old and it turns out that it's six or 8,000 years old really smart people trying to figure out how to get maximum economic Advantage from their lives in the gold industry and because that's been going on literally forever they've gotten really freaking good at it so the real world is a place of massive layered accumulated complex lexity and that massive layered accumulated complexity uh means that when you come along to try and digitize that it's a radically different experience from attempting to digitize something like an nft something like an nft it's pretty straightforwards the complexity is millimeters deep you get to the real world you look at something like a tax code it's 150,000 pages and it's been wrangled over for literally two centuries so the nature of the real world world has to be um considered very [2:30](https://www.youtube.com/watch?v=-EI1W-kB4fY&t=150s) differently from working with pure digital objects or even standard financial instruments so financial instruments which are the bulk of what people are digitizing these days when they say rwa they mean something like a t- bill the majority of those financial instruments are remarkably well behaved because of vast scale standardization every T bill was like every other t- Bill they're essentially products of industrial mass production and and as in products of industrial mass production there's a very very strong similarity between every object and every other object the legals are very similar the documents that describe the assets are very similar the contracts are very similar the best practices are well understood the custodial infrastructure is you know well nailed down so there's an entire world of things which are extremely standardized every share of IBM is like every other share of IBM every share of a publicly listed company has some similarities with every other share but all of those things put together um you know still have this massive layered complexity it's just that there's already an abstraction layer because these things have already been digitized um Equity started to be digitized in a big way in the 1980s so there's been 50 years of building software and building abstraction to handle equity and bond and T Bill and all the rest of these kind of assets to give you this sort of standardization a but for the assets that have never been digitally traded all of that work remains to be done so if you something like uh the wine industry the wine industry is staggeringly decentralized right every Vineyard does its own thing its own way a lot of them have weird custom and culture and I say weird it's weird to me weird custom and culture going back 150 200 300 500 years you know you get to France and you ask them to change the way that they're doing wine and it's like going to America and asking them to give up guns it's just core to the identity of that specific Vineyard well you know two weeks before everybody else sells s their wine we sell our wine because we are a little different we're on the south side of the hill we mature a little differently you know this thing has been in the family for 400 years this is how we do things so this is the kind of first takeaway right the real world is fabulous embedded complexity when we then get to digitizing things in the real world different asset classes have different benefits to different people and if you're not thinking in terms of real world buyers the appetite of the crypto markets for Real World stuff are pretty limited right maybe [5:00](https://www.youtube.com/watch?v=-EI1W-kB4fY&t=300s) they want to buy sneakers maybe they've got a bunch of money and they want to buy a house maybe they're used to buying you know expensive things digitally like nfts so the idea of buying a house using the same format seems pretty cool but the actual Market size of all of that stuff put together relatively limited right where the real action is is finally getting the real world use cases where the buyer and the seller come from outside of the crypto domain and the buyer and the seller do their de in crypto right now that could be usdc on one side and real estate on the other they're still doing dollars for a home but in that scenario um you know you're not necessarily dealing with dollars that originated from say trading you could be dealing with dollars that originated from somebody's savings or from a mortgage so when you start getting out into this kind of stuff everything becomes very driven by customer need customer requirement and our broad observation is that four classes of things have four different fundamental drivers uh I'm going to start with the infamous Strat of arus violin very high value art objects generally speaking look to the blockchain for fractionalization you have a physical thing it's extremely expensive a violin might be5 to4 million you want to transfer ownership of that violin to everybody that loves that violin that has heard that violin played and there might be a, or 500 or 800 owners so goes from being owned by a European royal family to you know the aristocracy and it goes from the aristocracy to the people so you think of all the people that would go to like you know the Metropolitan Opera and they would like to put 10 grand of violent Equity into their 401k plan and you do enough of that and the violin winds up owned by the people that listen to it and this is obviously a great thing right this is a form of community ownership of shared assets so what those folks are looking from from the blockchain is fractionalization and governance and those are two very very very important kind of core use cases for that Community um for real estate real estate is the world's largest asset class and there is no electronic exchange for Real Estate obviously you want to digitize real estate because that's the world's largest asset class you can't trade it electronically the paperwork Hall on real estate transactions is very much like the paperwork Hall on stocks and shares in the 1970s we still do this stuff in a way that's recognizable for decades needless [7:30](https://www.youtube.com/watch?v=-EI1W-kB4fY&t=450s) to say the inefficiency is are spectacular uh in America a real estate transaction until very recently had a 6% fee that was basically a standardized fee from a cartel that ran real estate business right that was the kind of The Brokerage is 6% there's only recently been a $400 million class action suit to break down that four uh that 6% barrier and allow price competition that's the first real opening up of real estate in decades and I think that's a huge Opportunity by the way for the blockchain um uh wine and by wine I mean wine paintings you know expensive handbags anything where the expectation is that it will have a single owner that's about fraud and it's about Provence if I can demonstrate for sure that this bottle of wine was bought for $122,000 directly from the vineyard and that it's been in Secure Storage every ever since I can sell it for $112,000 plus some uh degree of accum ulation of value over time if I have you know a scrap of paper on the back of an envelope and it's been sitting in my fridge at home for 5 years the odds of getting $112,000 for that are basically zero because everybody doubt discounts the offer well you know maybe you stored it improperly maybe you drank it and you rebottled it and maybe there could be any number of problems there one time in three if I buy a bottle of wine under these circumstances it will be a dad okay I'm going to offer you $88,000 and that kind of massive discounting of secondary sales is one of the reasons that we have a take make waste economy there's an endless stream of stuff that is bought it's impossible to resell by losing half of the value people then just throw it in the garage and sit on it and that IL liquidity percolates out through everything uh final thing is gold um the core argument for gold is very very very simple uh attaching the word stable to anything with the US dollar associated with it is insane how did we wind up in a situation where the core thesis of Bitcoin was the US government is incapable of stopping printing money and therefore it's going to destroy itself how do we end up with the product of that system being labeled a stablecoin this makes no sense hence gold is a much better way of backing crypto than dollars if you need stable assets let me recommend gold and there are specific ways of doing gold allocated gold bars numbered as nft is much better than gold tokens in general so I want to move on to talk a little bit about definitions of objects [10:00](https://www.youtube.com/watch?v=-EI1W-kB4fY&t=600s) um objects are networks there's a bunch of academic stuff from a guy called Bruno lur and other folks in that field that kind of talk about this but fundamentally no high value object exists outside of a network uh if you take a piece of real estate 60 people worked on it the materials came from you know 400 different places uh you know the roof tiles are from here and the nails are from there and if any one of these things is a defect it can destroy your building very very quickly oh the plastic that we used in the roof that was the wrong grade of plastic well there's water coming in and you know I've I've seen that problem right you know you actually see this stuff every time you touch real estate similarly you take the infamous $35,000 handbag you know the CH chain of suppliers could run directly into a fake bag but it could run into a real bag that was manufactured by massively underpaid labor who being squeezed way way way way way too hard by the luxury goods manufacturers in a way that's illegal you could wind up with a problem with you know any step of this process you know just something can come out and bite you so when you start actually looking at how these assets are being handled you have to think of a real world asset project as being a documentation of a complex value Network so you see an nft for a real world asset the nft needs a documentation package that unpacks and unpacks and unpacks and unpacks to give you insight into every single thing that gave that asset value and this is really the generic benefit of using the blockchain for these kinds of assets is you can have a digital representation of a complex value Network and that is not something that you can do in a paper transaction it's also something that e-commerce is really bad at um does anybody have a hard time buying things on Amazon because you search for something and everything that you seem to to find when you search is some knockoff piece of plastic crap that you don't believe will be any good when you purchase it Amazon 15 years ago didn't have that problem their business model has changed but what it's created is a huge sort of incentive gradient for getting really really crappy stuff and it's gradually drowned out the ability to just use Amazon as a source of Truth for physical materials you just don't believe what you read on it anymore if you had more insight into the value Network and you could see who the manufacturers were you could see who the designers were you could see how the stuff had been handled up until that [12:30](https://www.youtube.com/watch?v=-EI1W-kB4fY&t=750s) point you would have dramatically confidence that when you bought something it was actually what it was you thought you were going to get um so documentation standards for these complex value networks are a critical step in how the blockchain generates value and my company Mattereum has a documentation standard that does that called a Mattereum asset passport it's an excellent starting point for this kind of work um so next thing I want to talk about is the layered nature of the real world world so this is the legal stack that allows you to take an nft attached to a piece of real estate and have a reliable guarantee that you can exchange that nft for the title deed and that stack has layers going back to 1958 so at the very bottom there's the 58 convention UK arbitration act uh two years ago the UK jurisdiction task force set up a set of rules for digital dispute resolution we were involed involved in drafting those rules that project was led by the most senior judge in the UK for commercial law so at that point that's a sort of huge linkage between the 58 convention and the blockchain that's a staggeringly important thing that almost nobody really uses other than us but let me tell you that thing is a four real you know power tool then you get International arbitration you get warranties special purpose vehicles that Machinery is well understood from business in general you would see that in any substantial commercial real estate deal everybody knows how to do that and then on top of that you finally get a bit of blockchain specific stuff which is option agreements the nfts the Mattereum asset passport and all the rest of that stuff so that stack covers at least four radically different things an international treaty layer uh a set of very Innovative judges and Senior barristers um uh a set of standard practices from the real estate industry and then a bunch of blockchain specific legal machines so those processes to get this thing to work you have to be able to have a single system that's capable of bridging four completely different systems of knowledge and systems of knowing such that you get an integrated system that gives the user what they expect which is I buy the nft I get the house to get that kind of oneclick behavior you have to have that one click stretch all the way back through the implementation start right to the beginning uh and then this is not you know should not surprise us too much uh [15:00](https://www.youtube.com/watch?v=-EI1W-kB4fY&t=900s) if you think of the OSI stack this is the kind of standard internet engineering task force thing for talking about how you do this stuff that model you know goes all the way from the physical specification ethernet jacks or Wi-Fi radios right the way up to applications and the layering of that thing is not that different from the layering of the legal stuff that I discussed it's just the nature of real world complexity anything that has a physical end and a digital end is going to turn out to have these kind of properties um uh so I touched briefly on the New York convention the New York convention is the most accessible route to get any kind of global jurisdiction for your blockchain transactions if you want to be able to buy and sell something between basically any two countries on Earth more or less the only place you could go to get the kind of legal Machinery to do that is the New York convention very old very well understood everybody uses it it's it's just the way that business operates internationally you're going to have to synchronize your blockchain transactions with that um final slide space industry R needs defi so one of our uh Real Surprises in this process is that the space industry is staggeringly hungry for Capital and it wants to sell a bunch of really strange things like a future reservation of a time slot to have a tug boat that hasn't been built yet come and attach itself to a satellite which hasn't been launched yet to pull the thing up into a higher orbit because they're deploying Capital 5 10 15 20 years ahead because a mission can have multiple years of kind of work before it's actually launched legal agreements between companies for services for systems that haven't actually been launched yet are beginning to become a thing and at that point you think what would it take to a market place for Imaginary rights on Space assets that haven't been launched yet why that's you know how can you get that done well the answer is some kind of Commodities Market based on the blockchain looks ideal to the space industry Partners we have for doing this kind of stuff because it allows for the creation of arbitrarily complex objects with a lot of documentation packages including assets which are defined by software so you take a chunk of code which describes the orbital mechanics of some kind of thing you can just put that directly into a blockchain transaction um and I think that that is going to be a real sleeper but you know don't be surprised if in a few years you hear people [17:30](https://www.youtube.com/watch?v=-EI1W-kB4fY&t=1050s) talking about space fine it becomes a serious thing I think that gives us a couple of minutes for questions great fantastic thank you very much okay if there are no questions let me fill in 304 minutes 30 more seconds on space yeah okay because the space thing is amazing so what people we will want from space is the ability to deploy staggeringly complex Technical Systems that provide services to the Earth so if you think of starlink as an example of this at home I use starlink because I live in rural England and the internet is horrible best available internet comes from space similarly um you know things like satellites GPS uh geospatial imagery all the rest of these kind of systems all of that stuff is about providing services to the ground FL from space if you want to finance space projects which are going to provide services to the ground those are relatively straightforward commercial transactions the problem is it's almost impossible to get people to invest in the space industry because there's such a fear of the complexity from traditional Finance people it's very hard to get money into these projects so the prospect here is that if you could get the right set of financial instruments designed and then basically sold out into crypto defi type stuff what that provides is a kind of mass enthusiastic heavy lift capacity if you say right you know we got four NASA scientists and we're going to produce a satellite and it's going to produce the following kind of information about let's say the way that climate change is affecting Agriculture and it's going to help farmers you know adapt their crops to the environment that we're in if you get that kind of capacity it's quite hard to get private Equity to fund that but if you had really good documentation on something like that and excellent proof say it was going to happen in the right kind of team the idea that you could finance that on crypto essentially by iing entirely possible what do you Ico the future service tokens this will be one token it will give you 15 minutes on the satellite at the time of you're choosing there's going to be a market for this stuff there's going to be auction pricing and so basically you pre-sell the services of the satellites before they're launched and if you pre-sell enough of those Services you launch you never launch all the money is returned to the people that put the stuff already in it's basically the kind of utility token stuff that people we're talking about doing in 2018 but applied [20:00](https://www.youtube.com/watch?v=-EI1W-kB4fY&t=1200s) to an industry that has actual utility um and it's surprising how credible about luks to people in the space industry including for things like scientific research instruments like telescopes pre-selling telescope time you know you're going to do a PhD you've got a grant you want this much telescope time that satellite is going up in a year you need to buy the time in 18 months that sort of stuff actually makes sense inside the context of the space industry so I think we might discovered that there's some actually very heavy use cases in that domain in a year or two although by far the cash cow is going to be real estate because real estate is $3 trillion of transactions a year done on technologies that don't really work uh also don't neglect container shipping UK government estimates a $280 billion a year savings from container shipping uh so there is a lot of close to Market stuff as well but you know there is also uh a really surprising amount of interest from space uh I guess that's it thank you very much [Applause] --- End of [556] ETHCC24: 'Selling physical things using NFTs: what we have learned'. Its connections are at the top of this file; the map is https://guptaoption.com/llms.txt. Read next: next on the same works, [555](https://guptaoption.com/texts/555.md) Breaking Down Real World Assets: Crypto Daily, with... (2024); his whole career in one file, https://guptaoption.com/story.md.