A winery could assign a token to each physical bottle, and lets its customers freely buy (winery is involved) and then exchange their tokens based on the supposed bottle value ups and downs (winery is not involved any more). Then, from time to time, they come to the winery to take back a real bottle from a token.
Admittedly, there is little to program, but we can imagine all sorts of auctions, games (tokens becoming playable items in a virtual world, but still exchangeable for real bottles), etc., around those tokens.
Why would any of this need cryto? If you trust the winery to hold the wine you could trust them to rule the exchange. Each bottle could still have a token. Values could still rise and fall. All stored on a central exchange. These tokens issued by a trusted entity could perform the same function and can be cashed out.
The key feature of cryto is around connecting trustless entities. Once you centralize on a physical product stored in a trusted location by a trusted party you lose point involving cryto. Who cares how secure the token is when the winery can switch labels?
> Why would any of this need cryto? If you trust the winery to hold the wine you could trust them to rule the exchange.
That’s a little like saying “why would the winery need Apple to make computers for them, the winery could just develop their own computer hardware and software.” It doesn’t make sense for most wineries to develop its own online exchange system, and the fact that it’s technically possible for a winery to develop its own exchange system doesn’t mean that all existing exchange systems are pointless.
The critique being made in the original article, I think, is that it's extremely hard to find a hypothetical use case for blockchain technology that can't be done without blockchain technology. A wine exchange seems to pretty clearly fall into the "things we can do pretty well without crypto" category, so one needs to explain what crypto is bringing to the party that makes it a marked improvement. In this particular example, both "trustlessness" and "decentralization" are off the table (e.g., there is only one winery and you are trusting them to hold the physical goods).
Maybe, but there's some assumptions buried in here, I think:
- first, the token has to be usable by any exchange it's traded on. Different blockchain technologies may not be compatible. (For instance, you can't move an NBA Top Shot NFT from Flow to Ethereum.) This is a solvable problem from a technical standpoint, but given how fiercely ideological different blockchains are, there may be non-technical stumbling blocks that arise here.
- second, there has to be an "off-the-blockchain" legal connection between the token and the object the token represents, something that's recognized legally as a "bill of sale." This isn't a huge hurdle and I'd assume the purchase of the token includes language that covers this, but that legal language might include arbitrary limitations, such as stipulating that if you don't use their preferred exchange they'll charge you extra fees, or even restricting the token to specific exchanges entirely.
This is an issue that I think a lot of "smart contract" proponents just haven't come to grips with yet: when you read "contract" in terms of a blockchain, think "API contract" rather than "legal contract". A cursory search suggests there are Flow to Ethereum NFT converters out there, but if you run your NBA Top Shot NFT through one, does the NBA still consider it valid?
- third, this example is specifically tying the token to a physical object, which adds other complications. You may be able to successfully trade your token on Sunday, but the wine store may still only be open on weekdays.
The point is that there are multitudes of other technological solutions readily available which solve the stated problem far more simply then a blockchain.
Of course there are alternatives, and some alternatives may be better or worse depending on the features and qualities you desire. Again, there’s nothing unique about blockchains here. You could say the same thing about any random pick out of the top 50 CSS frameworks.
Admittedly, there is little to program, but we can imagine all sorts of auctions, games (tokens becoming playable items in a virtual world, but still exchangeable for real bottles), etc., around those tokens.