Can Provably Fair Trade Be a Technology of Spiritual Liberation?

Speaker 1

We’re going to now jump into our next talk. Vinay Gupta was going to actually be present in person. But due to a last minute change, he was unable to be with us. So instead, he’s streaming live from London. We’re really glad to have Vinay with us. Vinay is founder and CEO of Materium, a blockchain technology company bridging the virtual and physical economies with buyer and seller protection for physical asset NFTs. He contributed to the release of the blockchain platform Ethereum. He has long had a humanitarian concern with the condition of the poorest in society and disaster relief. He invented the cheap, simple, non-patented and open source HexaUt refugee shelter, which has gone on to become iconic in the Burning Man counterculture. Vinay, I told you that you would have a timer that you’d be able to see. I apologize due to a last minute change. We do not have we’re not able to send the timer in your direction. But you can at least hear us, and we will have we’ll open it for questions for Vinay at the end of the talk. So take it away, Vinay. Thank you.

Vinay Gupta

Okay, great. Could you turn on screen sharing? Can somebody do that? Because I have a couple of slides and I want to show you.

Speaker 1

Could we what was that? Screen sharing currently turned off. Oh, yeah, I will enable screen share. Just a sec. Sorry about that.

Vinay Gupta

Okay. No, no worries. Thank you. Okay. All right, there we go. I don’t have any slides, just a couple to say hello. So I did originally have a much more complex framing for this talk. And this afternoon, when I started to sit thinking about okay, I better get ready, it suddenly came to me that what I should have called it was moral computing. So moral computing it is.

Vinay Gupta

This really, the whole process really started during the pandemic when I sat down and I got an invitation to write a short book. 15,000 words, more of a pamphlet, for an English publishing house that wanted to do a series of books called The Future of. And they said to me, Vinay, write us something, the future of something. What do you want to write about? And so I wrote a little book called The Futurist Stuff, which was basically an attempt to sort of breathe some life into Gandhi’s ideas about fair trade. It was an attempt to really get a sort of nice, clear, 21st century statement about what the moral responsibility is that we have for the things that we consume. And so I wrote this book during the pandemic when business was kind of dead slow. And then over the last year or so, what I’ve been doing is weaving more and more and more of these kind of Gandhian principles. into the company that I’m building called Materium, which is a fairly standard blockchain company only with a lot more lawyers and a lot more middle-aged folks. So what I’m laying out here is basically a moral and technical argument for the way that we could start straightening out the world by using computers to do what they’re good at. And yeah, that’s what we’re going to be talking about today.

Vinay Gupta

So I want to start with the concept of a moral toxin. And a moral toxin is a bad thing which you know is happening, but you don’t know enough about it to stop it happening. And this stuff kind of builds up in your system in much the same way that, say, I don’t know, various kinds of chemical contamination from plastic softeners build up in people’s system. You know, all these stories you get about, you know, the amount of benzene and whale blubber in the Arctic making it too toxic for the Askimos to eat. Induit, I think, is the correct term these days. You know, there are moral equivalents inside of our society, right? Most people, me included, buy things that we know were made in China. Under uncertain labor conditions. At the very least, an authoritarian government, certainly a place where it’s very difficult to negotiate for workers’ rights or even unionize. And then you also have this suspicion of maybe slave labor, right? Uyghurs in one part of China. Are we really buying things from those places? Is it really slave labor? Certainly a bad scene. And so what we wind up with is this kind of Nagging, hard-to-voice anesthetic, our lifestyles make us bad people. And the nagging, hard-to-pin down aspect of that. Is the thing that makes it kind of insidiously destructive of our peace of mind and our general welfare, because we know that there’s a problem, but we don’t really have any mechanism to do anything about it. There is no cause and effect relationship. It’s like a broad-spectrum moral toxin. And the same way that we have broad-spectrum environmental toxicity. But in the case of the moral toxins, there is no EPA. There’s nothing to protect us. So, with that as a sort of context,

Vinay Gupta

What I then want to basically talk about is what’s the technological angle of handling this moral toxicity. And this is really a question about knowledge. The people that manufacture and went and grabbed some random plastic object, right? And you know, the thing that I use to watch the deer out my back window. You know, it’s some little plastic telescope doohickey, and it’s great, but you know, like, what do I really know about where this was made, or who made it, or how it was made, or the conditions it was made under? How do I know the stuff it’s made out of is not kind of poisonous? There’s just a whole bundle of unknowns around this thing. And what’s ironic about that is that somebody knows. Every single piece of information there is about this. You know, the shape of the lenses, it’s all in the CNC file somewhere. The material, there’s A spec sheet that somebody has for the material, both the specification where somebody bought this thing, but also the information that came directly from the providers. All the chemicals that went into making that plastic, these things were bought off spec sheets. And those spec sheets could be tied into material safety databases. And it ought to be possible, given that all of the information exists, to give this thing a very, very, very clear description. Of its composition right down to the place where the materials to make this thing were mined. And the fact that all that knowledge is already there, all that information is there, it’s not like we have to go and do a lab analysis to figure this stuff out. The information is all present in the supply chain. It’s just, you know, the information is getting bottlenecked.

Vinay Gupta

So when I buy this object, the money smoothly flows from me through my credit card to Amazon, through their payment rail. to the manufacturer, to their workers, to their vendors, to their vendors, vendors, their vendors, vendors, vendors, to their vendors, vendors, vendors, workers. So, we have a direction of travel for the money, where the money can smooth, seamlessly flow to the ends of the earth. But the information about what the money is accomplishing is dammed up and walled off and siloed, and we are protected. And I use the term in a very scarecrow way. We are protected from the knowledge about how the things that we are using were really created. And The result of that is that the entire world is sort of toxtified by the vague feeling that everything that we touch is probably made by slaves. and it’s destroying the world for us as we age and our children and their children, particularly their children. But we can’t get to the bottom of that and we can’t put a stop to it because the information is siloed inside of distant organizations. And those of you who are familiar with blockchain, at this point, your ears will be pricking up: like, did you say information silos spread all over the world? I think I have a fix for that.

Vinay Gupta

What my company did before the pandemic, before I had a chance to sit down and have a think about this, was kind of a very narrow specific use case, right? What we wanted to do was we wanted to develop a A physical gateway so that you could exchange cryptocurrency for physical assets: gold, real estate, fine wine, fine art, collectibles in the first phase, and then in the second phase, consumer electronics, furniture, clothing. and transportation vehicles. How do you do that? You need super accurate information about what products are, and you need the super accurate information about products are because blockchain payments are non repudiatable. Well, somebody rips you off for the blockchain transaction, you cannot call Amazon customer service to fix it for you. So

Vinay Gupta

Getting the time to sit and think and reflect about different parts of my life and how to bring them together, I’d always been very interested in Gandhi’s work. I had a long career as a humanitarian attempting to get solutions to things like climate refugees. But I had never really built the moral bridge, intellectual bridge, between that side of my life and that side of my work. and decide that was much more directly related to the blockchain, the future of technology. And that bridge building turns out to be a pretty pragmatic thing. I’m just going to share screen here for a second and actually show you a thing that we do. If I can find the window. Oh no, where’s it going? One moment. Oh, come on, technology. Come on, do me a favor here. Just work the first time. I’ll lost my window. Rots. Sorry, this is going to take me a tenth of a second. Oh no, what has it done? There we go. Right. Off like a herd of startled turtles. So there we go. Share screen. Oh, come on, what has it done? Nope, nope. Attempting to share screen, I can’t find the window that I’m trying to share. This is terrible. Nightmare. Come on, just share the right window. Damn you, there it is. Okay. Apologies for that. So

Vinay Gupta

This is a thing called a material massive passport. This is fundamentally what my company does for a living. So, you know, on one side, you have a famous Israeli DJ who wants to sell. And on the other side, there is a set of documentation about what that asset is. Here’s the thing. And on the other side, here is the documentation about the thing. So this is one of the first assets that we’ve done that has integrated inside of it this thing that we call a warranty claim on a carbon offset. So you look at the individual object, and inside of the data about the object, there’s a claim which says producing the NFT for this thing, you know, created. 300 kilograms of CO2. So 300 kilograms of CO2, and then what’s issued from that is a digital certificate. That says for that object, you know, can we prove that there was an offset purchase which removed that CO2? And surely enough, here it is. And that as a mechanism, you sort of look at that, and this is not rocket surgery. You know, there is no neural network, there is no AI, there is no deep learning. It’s simply a legal statement in a machine-readable form. That when you purchase a specific object, a secondary action is taken, which is some carbon is bought on your behalf. And that sort of approach is so simple. that you can easily imagine this becoming a standard way of approaching things.

Vinay Gupta

If you’re going to move a lot of global trade onto the blockchain, which I think is an expected outcome over the next ten years. There’s no reason that, as we move that trade on chain, we can’t make the systems bi-directional. You know, when you purchase something with money, you also get a set of information about that asset that becomes attached to your wallet. I paid this much money for this thing over here. It emitted 12 tons of carbon in the process. Here is my 12 tons of carbon offsets that are happening somewhere else in the system. And here’s the documentary evidence, which is stored in an immutable ledger, IPFS, or something along these lines, so that we can go and verify for ourselves that those offsets are there and that we really are protecting a chunk of rainforest. As a way of compensating for the fact that we did a lot of snowmobiling that year.

Vinay Gupta

And those kinds of systems, like It’s not that those things fix the world in and of themselves, right? If you don’t have the ultra-cheap solar panels and you don’t have some modification to the Western lifestyle, there’s no way that we’re going to be able to get the planet stabilized. What we can do is we can start this process of cleaning up the economy through this kind of transparency, using the blockchain to create a level playing field and to prove that people aren’t telling one person one thing and somebody else something else. Those factors together, plus the cheap transactions, plus things like cryptographic identities, so you can tell who it is that says something is true, those systems together look to me like they could complete the loop on trade. You know, rather than it just being money goes out and goods come back, money goes out, goods and information come back. And by combining the goods and the information and the money into a single backbone, the blockchain system, I think it’s possible that you would get a fairer world emerging as a combination of two forces. Firstly, the simple moral pressure, a kind of vegan approach of trying to push people towards a better outcome. And then on the other side of that,

Vinay Gupta

The prospect that having true transparency about goods generates a fundamentally more efficient economy because it allows us to do things like machine based searches for what we want in a kind of specification driven way. I want a sixty millimeter long Hex head nut with the following screw threading. And I could go out there and I could get something like that automatically located, found, maybe even purchased on my behalf because machine-readable specifications allow us to automate procurement. And in that world, machine readable specifications, automation and procurement, I can then say, hey, you know, Don’t let me buy anything that has a substantial risk of being manufactured by slave labor. And anything that I buy that contains a substantial amount of carbon, buy me offsets for it at the same time. And when we talk about concepts like automated morality or moral computing, this is the kind of idea that you can have computers support your chosen pattern of moral behavior. As long as we have the data to indicate which goods and services fall where on those moral spectra, and then you set what your acceptable criteria are, and the machines take care of the legwork of actually being a moral citizen. For that set of cases, there’s a lot more going on. We all have individual moral decisions that we have to make. But this kind of background smog of immorality, which is at the basis of things like climate change and the labor conditions around the world, I think that stuff we could potentially automate away. So that’s it. That was what I had to say today. Thank you very much for listening. And really, really sad I can’t be there. It really I’m on the wrong side of the world, but that does happen sometimes.

Speaker 3

Is there anything that would prevent the digital twins of people from being an NFT traded on a supply chain like materium, like in human capital bond markets? Is there anything that would prevent something like that?

Vinay Gupta

So Materium has a very strong rule that we don’t do this thing for anything that’s alive. Right. Could somebody else do something like this for actual humans? Sure. Any imaginable evil thing somebody in the world will do if you let them. But I think that the nature of the chain would make it very difficult to do that kind of stuff and get away with it. Because if you have all the documentation online that proves what it is that you’re selling It also makes it very, very easy for people to find you and arrest you if you’re doing something which is inherently deeply illegal in that way.

Speaker 4

Digital twins, he says. Digital twins, I may have misunderstood the question. So could you clarify a little? Uh next question they said. Okay.

Speaker 4

Uh yeah, my question is, as you’re helping to create these contracts between parties, how do you help instill trust between some of the agents? Or um how do you implement some of these recording like contracts from the h Human behavior side.

Vinay Gupta

Yes. So the approach that we take on this is there are no facts in the materium system. The materium system doesn’t allow people to discuss facts at all. All that we have is liabilities. So Party A says, you know, this is a good condition 57 Buick, and it’s all original parts, including the engine. And if it isn’t, you can claim up to, say, $150,000 in damages. And that approach to have every single piece of information that a person uses to make a decision be directly backed by a warranty. provides a really, really high standard of trust in the transaction, very specifically because we don’t trust the people. And that as an approach also allows you to have 10, 20, 30, 40, 50 people Use their assets to underwrite the truth about some set of transactions, and so we begin to create a kind of commercial web of trust. where there is interdependency between many parties to credential each other’s assets. And then also things like insurers come in to handle the sort of backbone risk management. So it all comes down to basically being able to get at recoverable assets to keep people honest.

Speaker 4

Thank you. One more question. Any other questions?

Speaker 1

Thank you very much, Vinay. Let’s have another hand for Vinay Gupta. Thank you all very much.