But the further you get off-chain with any feature of a distributed ledger, the more this model breaks down, for at least two reasons. First, because there’s less and less on-chain verification that goods or services are actually being provided, inviting fraud. This was seen repeatedly in scam ICOs, where entrepreneurs claimed their tokens were “backed” by real estate or diamonds – claims that couldn’t even be verified, much less redeemed, on-chain.
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