Smart property

[jancsika]

I've written a new article covering smart property, that is, physical items in the real world whose ownership is controlled by the Bitcoin block chain. You can find it here:

  https://en.bitcoin.it/wiki/Smart_Property

I give cars, phones and house locks as examples of things which can be traded or used as collateral in a cryptographically mediated way. Feedback welcome as always.

So if you give me a loan to buy an Iphone are you going to write into the contract that I'm not allowed to jailbreak it?  And isn't that the same as not paying a third party to implement the hair-brained DRM in the first place and just ask nicely to abide by the terms of the contract?

[Mike Hearn]

Yes, it's a form of digital rights management and the assumption is the implementations will be strong enough that it's easier to just pay back the loan than break the crypto-locks. Eg, to break most vehicle immobilizer systems requires replacing the engine (except for BMW cars where they screwed up). Immobilizers are often not particularly competent DRM systems - some manufacturers don't even use real cryptography at all - but they're good enough to stop most car thieves.

If you want to take things to an extreme, Bitcoin itself is just a form of DRM - the rights it manages are claims on quantities of value, and it manages those claims digitally to ensure you don't "copy" the value (double spend).

I don't have any personal problems with DRM - the idea that it's inherently evil is dogma and we should rise above it to examine the arguments on their merits. Locks of any form, whether digital or not, arise when the legal system cannot satisfactorily provide enough security because it's too hard to build and process a case against perpetrators of a crime. Without door locks burglaries would be a lot more common and most of them would go unpunished. Likewise, the legal system has shown itself incapable of handling copyright infringement even when the evidence is watertight, so content creators naturally resort to technical measures.

This leads to the question of whether the crypto-locks on smart property would be trustable (by the lender). Computer security systems of all kinds have a patchy track record but especially DRM.

I think it's absolutely possible to build systems that are good enough for this. The success of immobilizers show that even very weak digital security was a huge upgrade over analogue/physical locks and slashed car thefts. Systems built by experts tend to be even stronger.

These things come in generations. I'd expect the first few generations of smart property systems to have flaws that lead to them breaking. Over time defenders learn from experience and get better. We can see this with the development of pay-TV encryption, games console security, video disc security and so on. The difficulty of breaking later generations was orders of magnitude higher than for earlier generations. Eventually it reaches a point where the attackers go away. I've seen it happen multiple times.

Mike do patents, copyrights, trademarks for "Smart property protocol" only for Bitcoin blockchain,this should be under the control of the core team

Re: patents. You can't patent something that has already been disclosed (at least not in theory).

One reason I've been doing all this research is to try and ensure nobody actually does patent these features or protocols. Arguably Bitcoin has bigger problems to fix right now, but long-term public research is important to avoid trolls tying up the use of ideas that are too important to own.

[World]

this company can use smart property protocol to unlock the scooters and not only for iphone but on the other devices as well
Video http://gigaom.com/cleantech/the-zipcar-of-electric-scooters-launches-to-the-public/

[markm]

Many years ago I used to suggest that if we aren't watchful some day no one would be able to even use a simple tool like a screwdriver unless their DNA was derived from Bill Gates' DNA, as the ratchet in the handle would simply refuse to work.

This seems to be heading us there a lot faster than if we had to wait for DNA identification systems that can fit into screwdrivers...

-MarkM-

[Mushroomized]

This is good, I've read your article before I saw it here. Good job. As for people complaining that we don't use it yet... we just need to start working on something haha

[Mike Hearn]

That's true, good idea. You could just store the ticket in your phone and tap it to some reader on the turnstile to get in.

Perhaps a thought for a future Bitcoin conference :-)

[jgarzik]

Smart property would be a good way of enabling secure re-sale of electronic event tickets (to sports, concerts etc).

Exact-a-mundo ;p

Smart property simply proves that you "own" a digital token, nothing more.

So, as such, I think it is less like DRM that protects Apple's iTunes.  Nothing is encrypted, you are simply proving ownership.

The system that connects "proven ownership of digital token" to something useful is left open.  It could be as simple as "if you hold this token, I will pay you bond interest" in the distributed bond case.

[killerstorm]

It could be as simple as "if you hold this token, I will pay you bond interest" in the distributed bond case.

Shameless self-plug: I'm working on implementation, it is called "colored bitcoin": https://bitcointalk.org/index.php?topic=106373.0

[molecular]

That's true, good idea. You could just store the ticket in your phone and tap it to some reader on the turnstile to get in.

Perhaps a thought for a future Bitcoin conference :-)

grand idea! *remembers the fiddling with printed lists in London*

[World]

Potential for smart property
https://www.youtube.com/watch?v=D1L3o88GKew

[molecular]

Could "smart property" be used to trade shares of assets and pay dividends? What'd be necessary to make that happen?

[Mike Hearn]

Yes, it's possible. A share is somewhat like a bond that doesn't pay any interest, instead yielding occasional dividends (or none), and allowing you to cast votes.

The key used in the control output would receive the dividend, and you could sign votes with it then submit them to the issuer of the share.

It's only a minor variation on the scheme for bonds described elsewhere in this forum.

[killerstorm]

Could "smart property" be used to trade shares of assets and pay dividends?

Colored coins are very similar to smart property (or maybe it's the same thing, depending on how you look at it), and currently there are people who work specifically on "trade shares of assets and pay dividends". See here: https://bitcointalk.org/index.php?topic=106373.0

What'd be necessary to make that happen?

I think we'll get a working proof-of-concept in a couple of weeks.

Also Jeff Garzik is working on pybond: https://github.com/jgarzik/pybond

[Evolvex]

Arghh someone beat me to the punch re

Also, DRM on music/movies/content/ppv (physical disc, or digital download) could potentially be implemented as a smart property, this seems more likely in the near term than the car scenario.

Don't tell to Hollywood 

darn it, beaten to the punch - digital content was the first thing I thought off.

The way I saw it, someone would download an album from iTunes which is signed over to the customer who then OWNS that item and it has value (I dont think people consider there mp3 collection as valuable at the moment, napster/p2p has changed that - not that digital music ever had value - but now we have the blockchain....

I think smart property could be made to do wonderful wonderful things for society (or not in the wrong hands), in a lot of areas!

Subbed to this one - cant wait to see the proof of concept and where this thing can go

[molecular]

Yes, it's possible. A share is somewhat like a bond that doesn't pay any interest, instead yielding occasional dividends (or none), and allowing you to cast votes.

The key used in the control output would receive the dividend, and you could sign votes with it then submit them to the issuer of the share.

It's only a minor variation on the scheme for bonds described elsewhere in this forum.

Mike, I'm sure you mean this thread by you: Distributed bond markets and pay-to-policy outputs, right?

Could "smart property" be used to trade shares of assets and pay dividends?

Colored coins are very similar to smart property (or maybe it's the same thing, depending on how you look at it), and currently there are people who work specifically on "trade shares of assets and pay dividends". See here: https://bitcointalk.org/index.php?topic=106373.0

What'd be necessary to make that happen?

I think we'll get a working proof-of-concept in a couple of weeks.

Also Jeff Garzik is working on pybond: https://github.com/jgarzik/pybond

Oh, "colored coins", I saw that thread title before but dismissed it immediately as something to do with coin taint.

Thanks for the hints guys, this is all so exciting!

[blakdawg]

The way I saw it, someone would download an album from iTunes which is signed over to the customer who then OWNS that item and it has value (I dont think people consider there mp3 collection as valuable at the moment, napster/p2p has changed that - not that digital music ever had value - but now we have the blockchain....

I think smart property could be made to do wonderful wonderful things for society (or not in the wrong hands), in a lot of areas!

Well, that's the happy version.

Unfortunately, that's pretty much the opposite of what we've seen of copy protection/DRM over the past 30 years - the "smart property" will likely be used to make sure that if I buy a new computer or a new car stereo, I have to re-license all of my music again, or pay an extra fee so I can enjoy my content on a new device . . . or that if I sell my device, all of my content will disappear, and the new owner will need to re-license it. And if the device gets confused about the facts and circumstances, it may deny me what I've paid for, and since I'm "arguing" about my "rights" with a computer who thinks it knows all of the important facts already . . .

I am not saying that DRM is inherently evil - but that it has traditionally been designed not to protect the rights of people we'd think of as owners/consumers, but of the rights of publishers/lenders/sellers. That probably sounds good if you identify with those classes of people - but I spend most of my time using software written by other people, and machines designed by other people, and I spend more time than I'd like trying to work around practical problems with copy protection/DRM that prevent me from doing the things that I've (approximately) already paid for.

(e.g., I have paid for probably 8 licenses for Adobe Acrobat, and I have five people in my office who need to use it from time to time - but I am reluctant to re-image some computers, because I am not confident that I will be able to reinstall Acrobat, even though I've paid for it.)

[jtimon]

"Intellectual poverty" has no moral legitimacy. Information is not scarce.
I don't like that use case for smart property and you can't stop p2p sharing anyway.

[atpcas]

I had a thought about smart property in a business setting.  Suppose I issue bonds for my business to buy new equipment.  To ensure my investors that I don't run away with the cash there would need to be a way to mark the the bitcons I receive so that I can only purchase equipment with them from certain manufactures that will sell me products that have been tied to the bonds somehow.  Furthermore, there would need to be an added incentive for me to ship back the bricked equipment if I break my contract (say I get back triple the shipping cost).

[Carlton Banks]

Could "smart property" be used to trade shares of assets and pay dividends? What'd be necessary to make that happen?

Yes, it's possible. A share is somewhat like a bond that doesn't pay any interest, instead yielding occasional dividends (or none), and allowing you to cast votes.

The key used in the control output would receive the dividend, and you could sign votes with it then submit them to the issuer of the share.

It's only a minor variation on the scheme for bonds described elsewhere in this forum.

Distributed, cryptographically signed proof of ownership, digital commodity systems FTW. The whole paradigm has plenty of potentially useful applications, whether used partly or in full. I suspect the proof of work for creation could end up used also in another co-opting of the Bitcoin "design pattern".

Edit: of course, SatoshiDice has already subverted the intended use of the Bitcoin blockchain, so proof of work has already been re-used, but not totally re-implemented (yet, that I know of!)

[jtimon]

I had a thought about smart property in a business setting.  Suppose I issue bonds for my business to buy new equipment.  To ensure my investors that I don't run away with the cash there would need to be a way to mark the the bitcons I receive so that I can only purchase equipment with them from certain manufactures that will sell me products that have been tied to the bonds somehow.  Furthermore, there would need to be an added incentive for me to ship back the bricked equipment if I break my contract (say I get back triple the shipping cost).

I guess the simplest way yo do it is by using those funds to buy "colored vouchers" from your providers: that trade could be audited by anyone.