By CryptoCourt – Guest Contributor — I’m an attorney, crypto investor, and crypto miner. One thing I’m not: a software engineer. Following crypto conversations on social media is very much like watching people speak a language I barely speak, and one that I know I will never speak fluently. No doubt tech gurus have felt similarly listening to attorneys discuss contract law.
But as an attorney interested in helping the crypto world interact with “the state” (whether through federal, state, local or international law), I do my best to understand the technology.
When researching Smart Contracts, it is common to come across visions of use-cases that, to me, seem greatly distanced from our present. Yes, I can envision a future where crypto is easily transferred for the clean and clear title of PHYSICAL real estate, but (unless someone can show me otherwise) we are many, many steps away from that happening, involving the complex interaction of technology, law, and politics. There is a big difference between buying virtual property in Decentraland, and buying physical property in Omaha, Nebraska. In Omaha, you may move into your dream home and discover an underground oil tank that costs you 50k to clean up. Not in Decentraland. The difference is real-world risk. Making deals is about allocating risk.
So why do outlets like CoinDesk regularly publish articles suggesting that Smart Contracts are on the verge of changing the way we do deals?
Contracts are the connective tissue of the world – sales contracts, college acceptances, employment offers, insurance policies, medical prescriptions, NDAs, ISDA agreements, etc. Yes, Earth runs on contracts (not on Dunkin’). Ethereum allows contracts to go truly digital. The digitization of the contract is the digitization of the global economy, which has been valued at an estimated $270 trillion (compared to the $18 trillion market cap of gold that bitcoin stands to capture). Ethereum has the opportunity to upgrade entire economies, not just one asset class.
That is pretty big talk, and the tone is that these changes are happening imminently. Are they? I see the vision, but I just see a big … gap …
Smart contracts can be used in a real-estate deal. Both the parties (buyer and seller) can create a smart contract that can automate the deal once the buyer pays the property value to the seller. To make all of these happen, the property first needs to be digitized on blockchain technology. Once done, both parties can carry their deal using smart contracts.
The catch: the property needs to be digitized. When you realistically think what needs to happen – in terms of legal and regulatory hurdles, not to mention technological hurdles – for a physical property to be “digitized” in a way that it can be easily transferred through a Smart Contract on the Ethereum, that seems far off.
Don’t get me wrong, I love Eth. I look at a list like “100+ Ethereum Apps You Can Use Right Now” here, and I see plenty of existing or imminent use-cases for Eth in the space of DeFi and NFTs. But for those who are promising more out of Ethereum Smart Contracts, I would love to hear more about how we are realistically going to get there.