Smart Contracts for Building a Digital Art Market

There is a lot of talk about how Smart Contracts implemented using blockchain-based technologies will revolutionize commercial markets, eliminate the need for governments, and guarantee personal liberty.

But how would regular people interact with these new Smart Contracts? Are they totally automated and executed only within the blockchain? Or will they involve human? If so, how?

This presentation looks at how a digital art / media sales and licensing market could be rebuilt using these 3-in-1 Smart Contracts that are: 1) designed for humans, 2) crafted by lawyers, and, of course, 3) processed by machines.

Through the lens of Monegraph 2.0, a decentralized digital art market, we will show how we can chain together a sequence of Smart Contracts to register, sell, pay for, track ownership, and distribute digital art. We believe new definition of "Smart Contract" can be the foundation of other decentralized markets that wants to navigate the gap between trustless machines and (un)trusting humans.

This talk was originally given by Chris Tse (@christse) at the Ethereum D.C. Meetup on October 30, 2014.

About the Speaker:

Chris Tse is a technologist by trade, a designer in practice, and an entrepreneur at heart. He is the founding director of CardStack (cardstack.io), an open source project bringing a common “card” runtime that allows HTML5/JavaScript apps to move seamlessly between mobile devices, cloud services, as well as decentralized blockchains. Chris was formerly the head of McGraw-Hill Education Labs, leading innovative projects that creatively mix JavaScript, NoSQL, and Big Data technologies to facilitate teaching and learning.

Before that, he led the development of social media and dynamic publishing applications at BusinessWeek Digital. Before joining the New York media industry, he co-founded three other technology startups: a database consulting shop, a messaging software company, and a network security research firm.

Chris holds a B.S. in Computer Science from Columbia University and is still very much addicted to New York City. You can follow him on Twitter at http://twitter.com/christse

Related Decks from Previous Talks:

Monegraph: Building a Blockchain-based Digital Art Market
https://speakerdeck.com/christse/monegraph-building-a-blockchain-based-digital-art-market

Stacking the Card Deck [Manifesto]
https://speakerdeck.com/christse/stacking-the-card-deck-reclaiming-our-mobile-future-with-html5-based-cards

Resources & Links:

MoneGraph Home Page (Current Version)
http://monegraph.herokuapp.com

CardStack JavaScript Framework:
http://cardstack.io

Ethereum Project:
https://www.ethereum.org

Ziniki Network
http://zinikinetwork.com

Transcript

1. CHRIS TSE @christse Smart Contracts for Building a Digital Art Market
2. “This is mine!” “I’m giving this to you.” “Record the transfer.” Bitcoin: Trading Virtual Currencies Wallet Exchange Ledger
3. Monegraph: Trading Digital Art “I made these.” “I’m selling this piece.” “Record this sale.” Art Portfolio Sales Contract Owner History
4. Register the Work as a Public Record Create Digital Art as a File How Digital Artists Use Monegraph List in a Catalog in a Private Gallery
5. Register the Work as a Public Record Create Digital Art as a File How Digital Artists Use Monegraph List in a Catalog in a Private Gallery
6. Register the Work as a Public Record Create Digital Art as a File How Digital Artists Use Monegraph List in a Catalog in a Private Gallery
7. Register the Work as a Public Record Create Digital Art as a File List in a Catalog in a Private Gallery How Digital Artists Use Monegraph TITLE ARTIST(S) M O N E G R A P H R E G I S T R AT I O N aa8009ab182f4d55c45045 2f20b771840f0287d1cd31e a35018e2d52a7a8dd91 OWNERSHIP HISTORY DIGITAL FINGERPRINT PREVIEW
8. Register the Work as a Public Record Create Digital Art as a File List in a Catalog in a Private Gallery How Digital Artists Use Monegraph Excerpt of cars.gif TITLE Jennifer & Kevin McCoy ARTIST(S) M O N E G R A P H R E G I S T R AT I O N aa8009ab182f4d55c45045 2f20b771840f0287d1cd31e a35018e2d52a7a8dd91 OWNERSHIP HISTORY DIGITAL FINGERPRINT Jennifer & Kevin McCoy 1. PREVIEW
9. How Digital Artists Use Monegraph Excerpt of cars.gif Jennifer & Kevin McCoy D I G I TA L G A L L E R Y Register the Work as a Public Record Create Digital Art as a File List in a Catalog For Sale or Licensing (2014) Buy License • Graphics Interchange Format (7.1 MB) • Adobe Photoshop Source File (41 MB) Mesmerising
10. Excerpt of cars.gif Jennifer & Kevin McCoy D I G I TA L G A L L E R Y (2014) Buy License • Graphics Interchange Format (7.1 MB) • Adobe Photoshop Source File (41 MB) Mesmerising How Art Collectors Use Monegraph Make a Payment as a Bitcoin or Regular Transaction Agree to Terms as a Smart Contract Transfer Ownership of the Public Record
11. Excerpt of cars.gif Jennifer & Kevin McCoy D I G I TA L G A L L E R Y (2014) Buy License • Graphics Interchange Format (7.1 MB) • Adobe Photoshop Source File (41 MB) Mesmerising How Art Collectors Use Monegraph Make a Payment as a Bitcoin or Regular Transaction Agree to Terms as a Smart Contract Transfer Ownership of the Public Record Excerpt of cars.gif Anil Dash SELL TO M O N E G R A P H S A L E S CO N T R A CT aa8009ab182f4d55c45045 2f20b771840f0287d1cd31e a35018e2d52a7a8dd91 DIGITAL FINGERPRINT PREVIEW TERMS OF SALE 1 BTC (or USD 375) SALES PRICE • 5% commission to Francis Digital Gallery • Anil Dash will collect all future royalties • Artist will retain a license for personal use Agree & Proceed
12. How Art Collectors Use Monegraph Agree to Terms as a Smart Contract Transfer Ownership of the Public Record Make a Payment as a Bitcoin or Regular Transaction M O N E G R A P H PA Y M E N T 1JnG1aLycFhcFJZSor54yDpCz3s QGHCAiJ BITCOIN ADDRESS 1 BTC Pay $375 Anil Dash FROM Kevin McCoy TO $375.33 USD Digital Art Purchase Order USE BITCOIN WALLET Personal (5.823 BTC)
13. M O N E G R A P H R E G I ST R AT I O N How Art Collectors Use Monegraph Agree to Terms as a Smart Contract Transfer Ownership of the Public Record Make a Payment as a Bitcoin or Regular Transaction Excerpt of cars.gif TITLE Jennifer & Kevin McCoy ARTIST(S) aa8009ab182f4d55c45045 2f20b771840f0287d1cd31e a35018e2d52a7a8dd91 OWNERSHIP HISTORY DIGITAL FINGERPRINT Jennifer & Kevin McCoy 1. PREVIEW Transfer Ownership
14. M O N E G R A P H R E G I ST R AT I O N How Art Collectors Use Monegraph Agree to Terms as a Smart Contract Transfer Ownership of the Public Record Make a Payment as a Bitcoin or Regular Transaction Excerpt of cars.gif TITLE Jennifer & Kevin McCoy ARTIST(S) aa8009ab182f4d55c45045 2f20b771840f0287d1cd31e a35018e2d52a7a8dd91 OWNERSHIP HISTORY DIGITAL FINGERPRINT Jennifer & Kevin McCoy 1. PREVIEW Anil Dash 2. Transfer Ownership
15. A Deeper Look at Smart Contracts
16. Create Art Register Work Offer for Sale Agree to Sell Get Paid Artists:
17. Download Claim Ownership Discover Art Agree to Buy Pay Collectors:
18. Download Claim Ownership Discover Art Agree to Buy Pay Create Art Register Work Offer for Sale Agree to Sell Get Paid Collectors: Artist:
19. SMART CONTRACT TYPES Registration of Digital Work Storage & Delivery of Digital Assets Offer for Sale or Licensing Agreement of Title Transfer Multi-party Payment Settlement ARTIST MONEGRAPH GALLERY COLLECTOR SMART CONTRACT ACTORS
20. SMART CONTRACT TYPES Registration of Digital Work Storage & Delivery of Digital Assets Offer for Sale or Licensing Agreement of Title Transfer Multi-party Payment Settlement ARTIST MONEGRAPH GALLERY COLLECTOR SMART CONTRACT ACTORS
21. SMART CONTRACT TYPES Registration of Digital Work Storage & Delivery of Digital Assets Offer for Sale or Licensing Agreement of Title Transfer Multi-party Payment Settlement ARTIST MONEGRAPH GALLERY COLLECTOR SMART CONTRACT ACTORS
22. SMART CONTRACT TYPES Registration of Digital Work Storage & Delivery of Digital Assets Offer for Sale or Licensing Agreement of Title Transfer Multi-party Payment Settlement ARTIST MONEGRAPH GALLERY COLLECTOR SMART CONTRACT ACTORS
23. SMART CONTRACT TYPES Registration of Digital Work Storage & Delivery of Digital Assets Offer for Sale or Licensing Agreement of Title Transfer Multi-party Payment Settlement ARTIST MONEGRAPH GALLERY COLLECTOR SMART CONTRACT ACTORS
24. SMART CONTRACT TYPES Registration of Digital Work Storage & Delivery of Digital Assets Offer for Sale or Licensing Agreement of Title Transfer Multi-party Payment Settlement ARTIST MONEGRAPH GALLERY COLLECTOR SMART CONTRACT ACTORS
25. SMART CONTRACT TYPES Registration of Digital Work Storage & Delivery of Digital Assets Offer for Sale or Licensing Agreement of Title Transfer Multi-party Payment Settlement ARTIST MONEGRAPH GALLERY COLLECTOR SMART CONTRACT ACTORS
26. SMART CONTRACT TYPES Registration of Digital Work Storage & Delivery of Digital Assets Offer for Sale or Licensing Agreement of Title Transfer Multi-party Payment Settlement ARTIST MONEGRAPH GALLERY COLLECTOR SMART CONTRACT ACTORS
27. SMART CONTRACT TYPES Registration of Digital Work Storage & Delivery of Digital Assets Offer for Sale or Licensing Agreement of Title Transfer Multi-party Payment Settlement ARTIST MONEGRAPH GALLERY COLLECTOR SMART CONTRACT ACTORS
28. Agreement of Title Transfer Excerpt of cars.gif Anil Dash SELL TO M O N E G R A P H S A L E S C O N T R A CT aa8009ab182f4d55c45045 2f20b771840f0287d1cd31e a35018e2d52a7a8dd91 DIGITAL FINGERPRINT PREVIEW TERMS OF SALE 1 BTC (or USD 375) SALES PRICE • 5% commission to Francis Digital Gallery • Anil Dash will collect all future royalties • Artist will retain a license for personal use Agree & Proceed User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain Exam ple
29. Agreement of Title Transfer User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain Text: Seth Siegelaub and Bob Projansky AGREEMENT OF ORIGINAL TRANSFER OF WORK OF ART ! … WHEREAS Artist is willing to sell the Work to Collector and Collector is willing to purchase the Work from Artist, subject t WHEREAS Collector and Artist recognize that the value of the Work, unlike that of an ordinary chattel, is and will be affe and WHEREAS the parties expect the value of the Work to increase hereafter; and WHEREAS Collector and Artist recognize that it is fitting and proper that Artist participate in any appreciated value whic WHEREAS the parties wish the integrity and clarity of the Artist's idea and statements in the Work to be maintained and NOW THEREFORE, in consideration of the foregoing premises and the mutual convenants hereinafter set forth and othe ! ARTICLE 01 - PURCHASE AND SALE The Artist hereby sells to Collector and Collector hereby purchases the Work from Artist, subject to all covenants herein receipt of which is hereby acknowledged) (at the agreed valuation for the purposes of this agreement of ____________ ! ARTICLE 02 - FUTURE TRANSFERS Collector covenants that in the event Collector shall hereafter sell, give, grant, barter, exchange, assign, transfer, convey or bequest or by operation of law, or if the Work shall be destroyed and insurance proceeds paid therefor, Collector or C (a) file a current TRANSFER AGREEMENT AND RECORD in the form and containing the information set forth and called fo and subscribed by Collector or Collector's personal representative and Collector's transferee, with the (Artist at the add ___________________________________________ at ____________________ ) within thirty days of such transfer, d (b) pay a sum equal to fifteen percent (15%) of the appreciated value (as hereinafter defined), if any occasioned by such forth above) (Artist's agent for the purpose: ___________________________________________ at _______________ proceeds. ! ARTICLE 03 - PRICE / VALUE The 'price or value' to be entered on a TRANSFER AGREEMENT AND RECORD shall be:
30. Agreement of Title Transfer User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain if tx.value < tx.basefee * 200: stop if contract.storage[tx.sender] == 0: stop k = sha3(32,tx.data[1]) if tx.data[0] == 0: if contract.storage[k + tx.sender] == 0: contract.storage[k + tx.sender] = 1 contract.storage[k] += 1 else if tx.data[0] == 1: if tx.value <= tx.datan * block.basefee * 200 or contract.storage[k]: stop i = 2 while i < tx.datan: contract.storage[k + i] = tx.data[i] i = i + 1 contract.storage[k] = 1 contract.storage[k+1] = tx.datan else if tx.data[0] == 2: if contract.storage[k] >= contract.storage[2 ^ 255] * 2 / 3: if tx.value <= tx.datan * block.basefee * 200: stop i = 3 L = contract.storage[k+1] loc = contract.storage[k+2] Code: ethereum.org
31. User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain Anatomy of a Smart Contract
32. User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain Anatomy of a Smart Contract Designed for Humans
33. User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain Anatomy of a Smart Contract Designed for Humans Crafted by Lawyers
34. User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain Anatomy of a Smart Contract Designed for Humans Crafted by Lawyers Processed by Machines
35. User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain
36. Smart Contract Redefined
37. Smart Contract Clickwrap Word Doc x I Agree vs. vs.
38. Smart Contract Clickwrap Word Doc CUSTOMIZED STANDARDIZED x I Agree
39. Smart Contract Clickwrap Word Doc CUSTOMIZED STANDARDIZED x I Agree SWEET SPOT
40. User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain 3-in-1 Smart Contract
41. User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain 3-in-1 Ownership Title
42. User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain 3-in-1 Sales Offer
43. User Interface In HTML5/JavaScript Legal Agreement in English Enforced Contracts in Blockchain 3-in-1 Purchase Agreement
44. Download Claim Ownership Discover Art Agree to Buy Pay Create Art Register Work Offer for Sale Agree to Sell Get Paid
45. CardStack Open Source Embeddable Card Runtime
46. MoneGraph Digital Art Market CardStack JavaScript APIs
47. MoneGraph Digital Art Market CardStack JavaScript APIs Ethereum Cloud APIS Other Blockchains Apple iOS Apps Android Apps Ziniki Market Data
48. Key Takeaways 1. Most markets can be modeled as a graph of Smart Contracts 2. Smart Contracts are 3-in-1: For humans, lawyers, and machines. 3. Align to real-world legal code to handle the edges cases. 4. Monegraph Digital Art Market will launch with Ethereum in Q1 2015. 5. Underlying architecture can be the foundation for other markets. Sum m ary
49. Find out more… MoneGraph monegraph.com cardstack.io CardStack Ethereum ethereum.org Ziniki Network zinikinetwork.com
50. @christse Follow me
51. Ethereum D.C. Meetup Cryto Currency 2.0 D.C. Washington D.C. Bitcoin User Group Hack D.C. LOCATION WeWork D.C. Chinatown PRESENTATION DATE October 30, 2014