Internet person Logan Paul, fresh off wearing a $8 million Pokémon card to Wrestlemania — a sentence I am reeling from having had to type — has also this week opened a site called Liquid Marketplace, which claims to be selling stakes in physical collectibles, but in reality sounds like a disaster waiting to happen on every conceivable level.
Teaming up with Ryan Bahadori and Amin Nikdel, and having raised $US8 million (around $11 million) to open, the site says:
We want to make high-valued collectibles accessible to anyone interested in building their collection. To create a level playing field where those who truly appreciate these unique items can own something legendary.
Ah yes, an egalitarian rallying cry from technocrats, cool. The idea behind the site is that it will take collectibles, break them up into tokens, then sell a limited number of those tokens. Once the tokens are all purchased directly from the site, they’ll then be able to be bought and sold on a secondary marketplace.
They’re doing this with digital collectibles, like NFTs, but more interestingly — and much more precariously — they’re also doing it with actual, tangible collectibles, which must be shipped to their vault–whose name and/or location is not disclosed–and locked away, after which ownership will theoretically transfer to holders of the site’s tokens.
NFTs are dumb and worthless, but they’re also relatively easy to deal with on a conceptual basis, since they exist purely in a digital space. Trying to split up an actual thing into digital pieces and somehow reach a consensus on who owns it is a disaster waiting to happen. The site has rules for this, of course, but they’re fraught with loopholes for exploitation and/or peril, as The Block report:
Another tricky issue regarding tokenising assets — whether physical or digital — is about what happens at the end of the process. Once an item has been split up into thousands or millions of pieces and these tokens are possessed by thousands of people, how do you piece it back together in order to reclaim ownership?
In this case, there’s a buyout system. If one person manages to acquire a certain buyout percentage (not stated in the platform’s terms and conditions) then they are able to trigger a buyout vote. If 80% of the token holders vote in favour of a buyout at a given price within 72 hours, then that person is able to buy everyone else out. In this case, they are then able to claim the item and have it physically delivered to them.
There’s only one way this is going to end, and it’s:
As we just saw yesterday with the licensed F1 game, this NFT/crypto/blockchain stuff always looks so utopian on paper. And every time the rubber meets the road in a real-world scenario, it completely falls apart. In this case, what happens if the actual collectibles in the vault are damaged (Note: I’ve reached out to the site for more information on this)? Or stolen? Or the site goes bust and the physical items are lost while people still own their digital tokens? Or users have their tokens hijacked?
It’s all just so…complicated and unnecessary. A solution looking for a problem, the same way every other piece of blockchain “innovation” has always been.