Introduction to Smart Property
By: Garrison Breckenridge
Tags: Blockchain, Technology, Smart Contracts, Mattereum, Ethereum

Humanitarian engineer Buckminster Fuller once described an approach to building economic systems which he referred to as ephemeralization, defining it as our ability to “do more and more with less and less until eventually we can do everything with nothing.”

Now, such a thing seems impossible with the numerous technological and social constraints that come to mind, but the idea of “doing more with less” as a design principle — if followed responsibly — could eventually lead us to a future where atoms and bits dance in perfect synchrony, benefiting everyone at the expense of no one.

With that north star, we can start prototyping the systems of tomorrow with the tools of today.

With that in mind, let’s explore a potential techno-social medium for building this future: smart property.

What is Smart Property?

In the online age, people are used to summoning entities around the world to meet their everyday needs. A few taps on the scrying mirror of a smartphone can marshal human and autonomous agents to provide all manner of services. Transportation. Goods. Housing. Entertainment. Education. Nearly anything.

This ability to program value flows and social interactions around goods and services presents an incredibly powerful design space which we can refer to as smart property.

In practice, smart property is property that can be bought, sold, collateralized, and accessed via software APIs and search engines. While we already have this in a sense with housing (AirBnB), transportation (Uber), distribution (Amazon), and other areas, these systems are often controlled by centralized corporations operating under the illusory banner of “platform,” resulting in ongoing concerns around privacy, security, and labor practices.

At Mattereum, we believe smart property is an inevitable evolution of commerce, but how this system is implemented and the motivations behind it are paramount. Smart property can be how we achieve equilibrium with the planet and with each other, or it could be co-opted by the incumbent powers-that-be with results that can be read in dystopian science fiction.

Smart Property Can Fix Society’s Inventory Problem

The world is suffering from a severe misallocation of resources, especially on a long-term time horizon. At the core, this is a system design problem. Between planned obsolescence and trade globalization in the pursuit of corporate profit, the things we produce are not actually built to last and rely on an unimaginably complex, global infrastructure powered by distant (or not so distant) horrific labor practices and environmental costs.

The IPCW industrial cycle, designed by Mattereum CEO Vinay Gupta and a team at the Rocky Mountain Institute, provides an almost mandala-like mapping of industry. As you can see, the four main areas are Investment (of different capital types), Production, Consumption, and Waste.

One way to explain this odd paradox of gluttony and scarcity in the world today is to map where in this cycle we have innovated over the last half century, and where we have not.

Investment and Production witnessed a transformative leap in operational efficiency and scale in the post-WWII era, yet similar progress has not been made in optimizing Consumption and managing Waste.

Tightening these feedback loops will require better policy, technology, and social awareness.

We don’t know what we don’t know about our stuff and figuring it out is critical to achieving sustainability and improving quality of life for all.

Smart property as a design framework can help us generate, access, and act upon the necessary product information to build secondhand markets of durable quality goods and facilitate truly efficient p2p commerce. Imagine a digital wallet interface akin to an MMORPG’s character inventory in which the assets are actual objects which can be owned in common, shared, leased, bought, or sold with a few taps on a screen.

This is possible.

Smart Property Streamlines Complexity in Commerce

It is important to emphasize that smart property is not about embedding sensor devices in everything under the sun (Internet of Things, smart cities) and more about designing the social protocols around goods and services enabled by a tight integration between law and software to streamline, structure, and secure the numerous interactions and transactions around a good or service.

Oddly enough, with smart property it is the space and social interaction around an object which is where the magic happens. The ‘ground’ is the key design space rather than the ‘figure’ of an object.

On the first episode of The Future of Stuff podcast by Mattereum, Vinay illustrated the potential of smart property in multiple examples, including one that would seem random at first glance, but is profound in its implications.

The Logistical Nightmare of Wedding Planning

If the idea of smart property is to automate and streamline transactions and interactions between various parties around a good or service, reducing complexity and costs to those involved, then wedding planning makes for a surprisingly fitting use case.

Venue. Catering. Travel. Entertainment. Fashion. So many moving pieces in constant motion. What if there were a system which allowed one to aggregate these pieces via software protocols, creating order in the chaos and vastly reducing mental and transaction costs?

As Vinay explains, someone in charge of planning the event could use a smart property system to “build a multi-path matrix of possible solutions,” securing various options leading up to the day of the event as a safeguard for any failure or setback in the chain.

“It’s this ability to take processes where there are tons and tons of dependencies, turn the dependencies into option contracts, group the option contracts together until you have a solution, and then once you have a solution, execute all of the options. Bringing that kind of capability out of heavy engineering and finance into ordinary everyday people’s lives will be completely revolutionary.”

Of course, the application of smart property in event planning is not limited to weddings. Think of all the events we attend throughout our lives which involve networks of contracted parties which do the work of creating these dynamic social experiences. Concerts. Reward ceremonies. Conferences. Imagine booking and planning these events as easy as using AirBnB.

Smart Property is a Critical Use Case of Blockchain

It is imperative that a smart property system be decentralized and operated on a peer-to-peer basis. There’s a real risk of smart property systems as envisioned by Mattereum being co-opted by the incumbent Big Tech companies and being absorbed into monopolies and oligopolies, resulting in economic centralization with severe consequences for society (price distortions, resource misallocation, etc).

We do not want a world in which everybody owns nothing and Big Tech companies lease the majority of material goods to the populace, under contractual agreements which favor them at the expense of the user at every turn. No recourse. No agency.

If antitrust legislation and governmental efforts to prevent monopolies or keep them in check fail (and such legislation tends to wax and wane across administrations), then people would be at the mercy of market forces (such mercy does not exist).

Building smart property systems with p2p protocols is critical to ensuring that the already terrible distribution of wealth and power is not made even worse for future generations.

Blockchains provide cryptographically secure and verifiable transaction networks for the seamless and borderless exchange of value. A global, programmable medium of value transfer open to all is a design space we are still trying to wrap our heads around. And it is currently the most compelling technological solution for smart property.

Traditional client-server databases are silos which lack the interoperability necessary for coordinating and streamlining complex business transactions across multiple contexts. Having a shared financial infrastructure instead of a patchwork of protocols that struggle to maintain consensus can vastly reduce complexity and cost of trade.

However, neither blockchain nor any other computer system for that matter can power smart property alone. There needs to be a way of “programming” the material world and the social agreements between people.

Bringing the programmable value of blockchain into the real world requires a tight integration between legal systems that enforce property rights and the software systems which facilitate commerce.

Enter Mattereum.

Prototyping Smart Property with the Mattereum Protocol

Mattereum is building the legal-transactional framework that secures trust in digital commerce. Bridging the programmable value of blockchain-based digital assets with the programmable agreements of contract law with the affordances of both presents a compelling design framework for smart property.

The Mattereum Protocol leverages an integrated legal and software system consisting of three main components: Mattereum Asset Passports, Real-World Asset NFTs, and Trust Communities. Here’s how the protocol works, in brief:

(For a more detailed guide of the protocol, we highly recommend referring to the Mattereum Product Walkthrough.)

Asset Passports are a bundle of legal warranties tied to a particular object. Essential warranties include identification, confirmation of the presence and capabilities of verification technologies such as NFC tags, vault status, carbon offsets, anti-slavery certification, and tokenization. The heart of the Mattereum Protocol, Asset Passports are powerful, composable tools for securing property rights in virtual and physical space.

are a bundle of legal warranties tied to a particular object. Essential warranties include identification, confirmation of the presence and capabilities of verification technologies such as NFC tags, vault status, carbon offsets, anti-slavery certification, and tokenization. The heart of the Mattereum Protocol, Asset Passports are powerful, composable tools for securing property rights in virtual and physical space. Real-World Asset NFTs are unique digital tokens that denote the right to take physical custody of a particular object. While sharing features with the NFTs now gaining popularity in the cultural mainstream in the creative industries, these tokens are different in that they are backed by an underlying physical asset, complete with warranties, insurance, and legal enforceability to create trust in trade. They are paired with objects via a warranty in the Asset Passport.

are unique digital tokens that denote the right to take physical custody of a particular object. While sharing features with the NFTs now gaining popularity in the cultural mainstream in the creative industries, these tokens are different in that they are backed by an underlying physical asset, complete with warranties, insurance, and legal enforceability to create trust in trade. They are paired with objects via a warranty in the Asset Passport. Trust Communities are the networks of expert certifiers that accrue around each object (artwork, memorabilia, precious metals) throughout its lifetime. All expert certification of an object is backed by a legal warranty as well as financial stake, adding weight to an expert’s assessment. Built upon the composable, legal-tech framework of the Asset Passport, Trust Communities restore value, increase liquidity, and bring peace of mind to digital commerce.

So far, the Mattereum Protocol has tokenized a wide range of objects, ranging from gold-backed NFTs, to pop culture memorabilia, to historical/cultural artifacts.

Currently, these assets and arrangements are only a simple display of smart property. An asset is secured in a vault and can be physically delivered to the NFT bearer upon burning the token, with all the necessary legal warranties attached to the property. A transferable, cryptographic voucher of sorts.

Mattereum is researching and developing tools and methodologies to build upon this groundwork, streamlining the passporting and tokenization process for a wider range of asset classes and exploring new opportunities in this exciting design space.

In the future, there will be smart legal templates which create a streamlined user experience around generating the Asset Passport and minting digital assets, automated custodians that reduce the risk and complexity around custody of physical goods (and even provide corporate legal status of certain objects to empower collective ownership, asset governance, amongst other possibilities), advanced search capabilities with robust metadata schemas of all goods and services on the protocol, and APIs that allow others to build and expand on these foundations.