General Questions
What is a Digital Deed?
Proof 8 has pioneered the concept of using blockchain based non-fungible token (NFTs) technology to create deeds for physical products in the spirits industry. We extend the capability of NFTs to record all available information about a given physical product such that there are no external dependencies (except for media). We use the term Digital Deeds instead of NFTs for these as they are so much more than traditional NFTs.
Can anyone buy a product via Digital Deeds (such as a Cask or Bottle)?
The simple answer is yes - there are no restrictions as the underlying product is considered a property. However, Metacask will verify your details and may conduct Anti-Money Laundering checks to ensure that you are indeed allowed to buy and trade these product. This differentiates Metacask from all other Web3 platforms, but the requirement is necessary as prospective purchasers are owning a physical product which is held in bond.
What does the Digital Deed entitle me to?
The Digital Deed represents your ownership of the physical product. This will replace the certificate of ownership, which are generally issued by brokers, and is at times is used instead of the paper-based Delivery Order required to signify ownership to the storage facility (distillery or warehouse). The proof of ownership certificate is only as reliable as the brokers systems and ability have this available beyond insolvency. A Digital Deed on blockchain provides a verifiable and transparent proof of ownership.
Do I need a Delivery Order?
The current ecosystem, for the most part, recognises ownership at the storage facility level via a Delivery Order. However, for most facilities, this is a time consuming process and most brokers hold the casks in their name at the facility and issue a Certificate of Ownership. Brokers track this ownership via private databases. Proof 8 is taking the first step to record this on the blockchain as an irrefutable record of ownership of the cask. The eventual goal of Proof 8 is to remove the need for the delivery order and rely on the blockchain for inventory and ownership management.
Can I get a Delivery Order?
Yes it can be arranged, each Digital Deed has an onward sale commission which is designed to support additional services such as obtaining the Delivery Order, insurance and storage. Obtaining a Delivery Order is a redemption process, which then changes the nature of the Digital Deed, it becomes a collectible.
If the issuer fails, do I lose the product?
Given the Digital Deed represents your product, and the ownership is recorded on the public blockchain, in the unlikely event of an issuer insolvency, the liquidators can refer to the blockchain as a source of truth over the ownership of the product. In this event, the Digital Deed can be redeemed and a delivery order executed to move the ownership at the facility level to your name. Once the Digital Deed mechanism is widely adopted, there will no longer be a need for this, as the blockchain provides the record independent of the issuer.
How does the storage work?
Typically products such as casks are held under bond in facilities that are regulated by revenue services (such as the HMRC in the UK.) Here, the cask will be kept in the best conditions for the whisky maturation process. The cask will be monitored and can be re-gauged at any time for a fee. Other products will follow a similar principle depending on where they are produced. Often an issuer will state the initial period that is covered as part of the pricing, after this period expires, the storage and insurance costs are your liability.
Can I view my Cask?
In the early phase of this project, it is most likely the cask will be held under the brokers name at the facility and your ownership is via the Digital Deed. As a result, the storage facility may not have a direct record of your ownership. Once Proof 8 is adopted widely, storage facilities will be able to verify your ownership and therefore allow you to visit the cask - not such visits may incur additional charges.
How do I arrange insurance?
As the Digital Deed represents a product in the issuer's name, the issuer will arrange for insurance for the product until you request a delivery order and the Digital Deed is redeemed. At this point you can move the cask to a storage facility of your choice and arrange insurance as you see fit. There are numerous specialist providers, and the issuer or Metacask maybe able to assist with finding a trusted provider.
What will these products cost?
At the starter end, the product can be anywhere from $150 to $5000, special products will be released that are of much higher value periodically, so watch out for these.
What factors determine the value of a product?
The product value is determined by the year of production, type of the product (cask/bottle), distillery, age, OLA (Original Litres of Alcohol - if cask), RLA (Remaining Litres of Alcohol - if cask) and ABV (Alcohol by Volume). Additionally, extra special Digital Deeds released on Metacask may have extra content which may supplement the value of the physical product.
How long do I hold a product?
With a cask for example, as the liquid matures, typically there is also a price appreciation. Not all casks will mature and appreciate the same way, and any past pricing is not really an indicator for any future performance. As the marketplace evolves and pricing becomes more transparent, it may be possible to shorten the holding periods as casks can be traded in a more liquid market. Or you can hold it as long as you wish, and even eventually have it bottled!
Bottles typically have different characteristics and will be driven by market pricing. Existing e-commerce sites maybe able to provide some guidance on pricing of bottles, and it is also worth keeping an eye on traditional auction venues for some indication. Metacask will eventually also be good reference for such pricing.
Can I sell out at any time?
On Metacask, you will be able to sell your product without any restrictions, the price will be determined for auctions by the platform and it is up to you whether you accept the price to sell at. You can also request a delivery order and burn the Digital Deed, and arrange a sale through another traditional broker, though we hope you will be able to find liquidity on Metacask.
What are my exit strategies?
You can for example list the product for sale on Metacask, or redeem the Digital Deed and take physical ownership and sell via a traditional broker. Finally, you can always request it be bottled and take delivery of the bottles - this is of course the tastiest option!
Will my product moon?
The simple answer is no. These are real world products with capital appreciation tied to the characteristics of the physical product. There may be some products that appreciate more than others, but this happens over the lifetime of the product (measured in years rather than days).
Paying with BitPay in Cryptocurrency
What is BitPay?
Founded in 2011, BitPay is the world’s largest provider of cryptocurrency payment services.
What is cryptocurrency?
A cryptocurrency is a digital or virtual currency that is secured by cryptography. Many cryptocurrencies are decentralized networks based on blockchain technology—a distributed ledger enforced by a disparate network of computers. The word cryptocurrency is derived from the encryption techniques that are used to secure the network.
Which cryptocurrencies can I use?
BitPay supports leading coins including Bitcoin (BTC), Bitcoin Cash (BCH), Dogecoin (DOGE), Ethereum (ETH), Litecoin (LTC), Wrapped Bitcoin (WBTC), Polygon (MATIC), Apecoin (APE), 4 USD-pegged stable coins DAI, GUSD, USDP, and USDC), and 1 EURO-pegged stablecoin (EUROC)
Which crypto wallets can I use?
BitPay supports more than 100 different crypto wallets and exchanges including BitPay, Coinbase, Exodus Wallet, Ledger Wallet, Trust Wallet, Electrum Wallet, Blockchain Wallet, Metamask, Gemini Wallet, Kraken, BRD Wallet and more.
Where can I find exchange rates for cryptocurrencies?
You can see current exchange rates for all supported coins .
DISCLAIMER: The exchange rate is fixed for 15 minutes. Neither Metacask nor BitPay are responsible for changes to the exchange rate if the payment does not occur within this timeframe. For any issues, contact your crypto wallet.
Anti Money Laundering, OFAC, Source of Funds Checks:
BitPay is a licensed money transmitter. Bitpay does anti money laundering checks, OFAC checks, and source of funds checks. Depending on the dollar amount of the transaction and the country where transaction is happening, customer may be prompted to provide their ID using the BitPay ID system. Customers can also get pre-approved for a BitPay ID here .
