As much as I always liked the idea of a more frictionless system for the transfer of asset ownership, I still have too many open questions on the integration with the legal system of the participants.
Say you have the NFT that claims ownership of a house. Now the local court allocates half of the house to your ex-husband whom you’ve just divorced. How is this (exemplary) case handled on the chain? How is any repossession through local legal system? Who gets to own the house should the private key be lost?
The answer to most of these questions is usually (I do not know your solution) some centralized entity that is introduced somewhere in the chain.
This may have come of as an attack, but be assured that I am genuinely curious whether a solution has been found that I am not aware of.
7. The blockchain is now at a stage in its development equivalent to where the internet was in or around 1995. The internet was unstoppable in 1995 and blockchain technology is unstoppable now. It will become ubiquitous in all major industrial and financial sectors, simply because it allows for the immutable recording of data, thereby reducing friction in commercial and consumer transactions and obliterating the scope for dispute as to what has occurred.
8. As the Master of the Rolls and Head of Civil Justice in England and Wales, I hold an office that pre-dates modern trade in derivatives and reinsurance, even steam engines, powered flight, and certainly the internet. I am particularly and obviously concerned about the reputation and development of English law and the jurisdiction of England and Wales.
9. Many people do not realise that English law governs trading in €600 trillion of OTC derivatives annually, in €11.6 trillion in metals trading, in £250 billion in M&A deals, and in £80 billion in insurance contracts every year – just to take a few examples. My hope is that English law will prove to be the law of choice for borderless blockchain technology as its take up grows exponentially in the months and years to come.
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Point being none of this is happening outside of the framework of law: transfer of ownership is the objective of the system. If you're legal owner of the house and a court takes half of it off you, the legal package around the NFT kicks in, breaks the tie between the NFT and the land (yes, there's an authoritative way of indicating this) and you then figure out what to do with the remaining property rights.
When dealing with land, the legal system is always primary.
The underlying contract stipulates a change of ownership. For this change of ownership to have legal effects (iow, to actually happen), it needs to be registered at the Land Registry. Transferring an NFT does not magically result in a change of ownership being registered at the LR, so it's unclear what it actually accomplishes.
What's exchanged on chain is an option agreement. When the option is exercised, the SPV which actually owns the land transfers the title on the national register.
There's a liability framework in place to make sure they do, and stamp duty etc. are paid when the NFT is transferred: that's where the interest is transferred.
Thank you for the answer, I appreciate the time you took to write it.
As I understand it, there is a legal vehicle which performs the actual transfer and the NFT transfer acts as a signal of interest for both parties. In that case, I see the benefit that neither party is bound to a certain platform/software to initiate the transfer. But overall, I admit that I still do not see why this requires zero trust and decentralization as primitives in the solution, which come with hefty caveats each.
Thank you for the short summary (assuming you understand it correctly); I was having trouble following the legal rights and obligations of the different parties.
I also share your confusion: if a central body is trusted in this scenario, then why can't the atomic transactions be equivalently performed on a public Merkel tree with a centralized source of truth?
Actually, immutability may probably not even required/desired given the surrounding legal construct and the described processes.
Disclaimer: I am not a lawyer and the previous post is my understanding of the described as a layman. I am pretty firm on the technical concepts surrounding blockchain solutions, though.
I could see immutability as being useful for the same reason that append-only databases in general can be useful, to ensure that unlogged transactions are inherently ruled out. Even with an immutable data structure, changes by the trusted central body can always be encoded as overlaid "corrections".
Compliance with present and future privacy laws could easily become an issue, though, unless those laws contain specific carve-outs.
(I'm also no lawyer, I've just been interested in the cryptography surrounding the big blockchain projects. Much of it looks like it could be surprisingly useful outside the trustless, decentralized contexts everyone likes to talk about.)
No it can't. That four months is the time it takes the UK government to update its records and acknowledge a transfer of ownership. You can't subvert that, because for the UK to recognize you as the rightful owner of the land, they need to update their records. The government will look at their own records in the court of law, not your NFT.
If you’d like to inspect the contracts do please take a look at the Asset Passport linked from the NFT.
They explain exactly how the transfer is effected, and how and when the government land register is updated.
Anybody familiar with UK real estate law will find the mechanisms reasonably familiar from any property deal involving SPVs. (Special purpose vehicles)
Say you have the NFT that claims ownership of a house. Now the local court allocates half of the house to your ex-husband whom you’ve just divorced. How is this (exemplary) case handled on the chain? How is any repossession through local legal system? Who gets to own the house should the private key be lost?
The answer to most of these questions is usually (I do not know your solution) some centralized entity that is introduced somewhere in the chain.
This may have come of as an attack, but be assured that I am genuinely curious whether a solution has been found that I am not aware of.