So, Someone Stole Your Ape….
How Mattereum’s cutting edge legaltech innovations solve the problems of trust and ownership on the blockchain
Actor and producer Seth Green has been an avid collector of NFTs and recently teased a trailer for a TV show called White Horse Tavern at the NFT conference VeeCon. This seems to be a sitcom based on the premise “What if your friendly neighbourhood bartender was Bored Ape Yacht Club #8398?” and is meant to be based on one of the Bored Apes Green owns. Or should I say “owned”; Bored Ape Yacht Club #8398 and the related IP that would have made White Horse Tavern possible are no longer owned by Green. He got caught out by a phishing scam in early May that ended up with someone swiping Bored Ape Yacht Club #8398 as well as two Mutant Apes and a Doodle, and has been reduced to pleading on Twitter with “DarkWing84”, who bought his Ape from the scammer, for its return so he can go forward with his plans.
This highlights intrinsic weaknesses with NFT trades; when you buy something you just have to trust the seller that what they are telling you about the thing is true; that it hasn’t been stolen and it is theirs to sell. Also, when you do have an NFT stolen, because blockchain transactions cannot be undone and there is no authority in charge, there is not much you can do to get your NFT or your money back. But what if it didn’t have to be that way? Mattereum have created a system that uses NFTs linked to physical objects or IP that is backed by warranties that have real legal force, allowing for disputes to be arbitrated in courts that understand the technology and whose judgements are legally enforceable in all 165 jurisdictions that are signatories to the 1958 New York Convention on Arbitration.
So, how does this actually work? There are increasing numbers of organisations starting to offer NFTs linked to physical objects, but none have done the in-depth legal groundwork that Mattereum has. This means that purchasers no longer have to just trust the seller of an NFT — experts, not just sellers, provide warranties around the facts in the NFT, with multiple experts combining to effectively create “mini DAOs” around the assets they warrant, maximising certainty and increasing the value of assets. When an expert provides a warranty to an asset in the Mattereum system, they back it with a financial stake which is legally enforceable, in other words they are saying “if what I say here proves to be wrong, I will pay the purchaser x% of the value of the asset”. The seller also warranties the item, so if it proves not to be theirs to sell, or they otherwise misrepresent it, they face financial and legal consequences. This provides a powerful incentive for everyone to tell the truth about an asset. It is even possible for an expert to come along and add an adversarial warranty to an asset, disputing the facts put forward by other experts, so a potential purchaser can see there are doubts and make their purchasing decisions accordingly. Warranties are put together in a Mattereum Asset Passport (MAP) for each asset, secured cryptographically, and may be backed by insurance as well.
All NFT sales involve smart contracts, but a smart contract is not a legally binding agreement, it is merely a set of instructions based on what is defined in an agreement. If the underlying legal contracts are weak, the NFT could be compromised. Mattereum goes further and uses Ricardian Contracts which provide very, very strong protections for NFT buyers. These were invented in 1995 by Mattereum Chief Scientist and financial crypto pioneer Ian Grigg and are a legally binding natural language smart contract. A Ricardian Contract turns law into code, which deals with the complexities of interpretation that arise from the rigidity and limitations of using code to express basic contract and relational terms. A Ricardian Contract exists in both human- and machine-readable format, requiring no coding expertise. They are electronically signed and recorded on the blockchain; cryptographic signatures bind parties, define intentions and execute instructions automatically. This means that if there is a dispute among the parties involved, the case can be resolved in court or through arbitration.
Even better, the new Mattereum Trustable NFT provides another layer of protection to NFT buyers. In the UK there has been a serious push on upgrading the legal provisions for handling disputes over digital assets. The UK Jurisdiction Taskforce’s new Digital Dispute Resolution Rules establish the procedures for parties to contest things like who actually owns a particular NFT. If the NFT smart contract includes special procedures for legal disputes, in the UK the arbitrator (and no other party — not even the company that issued the NFT) has legal and technical capacity to transfer the ownership of the NFT without creating any new legal liability for any party. In short: you can go to a private court, plead your case, and if the NFT is a Mattereum Trustable NFT, you can get your digital property back. This legal provision is enforceable under international law in 165 jurisdictions. So, if Seth’s Ape had been linked to one of these, he’d have been able to get it back, no problem. We feel this is absolutely necessary for the evolution of the NFT field as more and more valuable IP and physical assets are bound to NFTs. BAYC, if you’d like to add this feature to future drops, get in touch!
As a result, if you buy an NFT that has been created through the Mattereum system you know the information about it is likely to be true, and if it isn’t there is a built-in path to legal redress. If someone steals your NFT you can put an adversarial warranty on it to that effect and take legal action to have it returned to you. That way, no one can make a monkey out of you over your Ape collection.
