Space Commodities Exchange – a new frontier

The space economy is estimated to be $330BN, growing to perhaps $3TN in 30 years.

To service initially government, and increasingly private sector, needs for launch, telecommunications/bandwidth, imagery, scientific research, fabrication and other activities in low earth orbit (LEO), traditional and new aerospace and aeronautics companies are developing the rockets, satellites, energy, cameras and other tools for short- and long-term activities in space.

The space economy is an opportunity to grow new careers for engineers, physicists, medical professionals, and eventually mining, manufacturing and other trades. The space economy promotes students and research across numerous fields of STEM – Science Technology Engineering and Math. As humans look up at the night sky from all over our planet, the space economy and the innovations it requires raise common hopes and dreams for operating  cooperatively, collaboratively, for the benefit and even survival of all humankind.

Two key factors limit the rate of growth for the spaced economy: liquidity (the delays between when a company builds its space asset and when the asset generates revenues to repay investors and lenders), and risks (technical, financial, political and random).

Viewed from a wider lens historical perspective, these factors – liquidity and risks – are inherent in many terrestrial industries, such as agricultural where crops are planted subject to weather, rain, insect and other factors dictating the harvested crop’s quality and yield.

To handle such liquidity challenges and risks, and to better match the supply of marketable goods and services with their demand, various industries have created commodities exchanges to define the characteristics of what “commodity” is being produced and sold, and the standardized contractual terms on which the commodity would be sold.

Urban Logic conceived of a formalized commodities exchange that lets all market participants in the space economy better visualize and predict market opportunities and risks, by enabling them to trade standardized and reliable space commodities to be designed, supplied, or necessary in the near future. Such an exchange would enable commercial and government organizations to identify quantifiable surpluses, gaps, valuations, and destinations for space commodities that economically and scientifically achieve and sustain their space exploration and development goals faster, cheaper, and safer. Such organized market transaction data and analysis would also let potential suppliers better understand market demand and justify capital investment and valuation.

Inspired by the commodities futures trading exchanges that exist today terrestrially, Urban Logic is working to establish a similar trading exchange to support the emerging space economy by offering five groups of space commodities, including futures contracts for standardized in-space services to financial derivatives for risk transfer and liquidity. Without a Space Commodities Exchange, growth of the space economy could be slowed or investments mis-allocated.

Much of our research justifying the Space Commodities Exchange is shared in a May 2018 paper, lead authored by Urban Logic’s CEO and founder, Bruce Cahan: Space Commodities Futures Trading Exchange: Adapting Terrestrial Market Mechanisms to Grow a Sustainable Space Economy (https://doi.org/10.1089/space.2017.0047).

Urban Logic’s next step in organizing the Space Commodities Exchange is to convene a Board of Trade of all interested parties.

To contribute to this project, and to suggest Board of Trade participants who would actively use and shape the Exchange, please contact Bruce Cahan bcahan [at] urbanlogic.org.

For Bruce Cahan’s presentation of the Space Commodities Exchange at NewSpace Conference 2017, see this video: https://www.youtube.com/watch?v=EWEtBIxREsU.

Bruce Cahan

Bruce Cahan is CEO and co-founder of Urban Logic, a nonprofit that harnesses finance and technology to change how systems think, act and feel. He is an Ashoka Fellow, and a Lecturer at Stanford University's Department of Management Science & Engineering, a Distinguished Scholar at Stanford mediaX and a CodeX Fellow at Stanford's Center for Legal Informatics. Bruce was trained as an international finance lawyer at Weil Gotshal & Manges in NYC (10 years) and as merchant banker at Asian Oceanic in Hong Kong (2 years). Bruce graduated The Wharton School at the University of Pennsylvania (B.S. Economics 1976) and Temple Law School (J.D. 1979). Bruce has been licensed to practice law in California (2006), New York (1980) and Pennsylvania (1980).

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Technology takes over the Law
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Technology takes over the Law

Our commercial world is becoming a cascade of EULAs:  End Use License Agreements, shrink-wrapping us and our rights and remedies into confirming to however the product or service offeror sees fit to treat consumers.  Not just software, but banking online, employment applications, job search sites, and even places where dinner reservations are made impose a daily diet of EULAs, beyond human reading capacity.

These agreements are so frequently a facet of our lives – a kindred spirit – that few of us read or have the time to read them.  So we “click-through” EULAs, unaware and seemingly uncaring of the risks, value-barter, and consequences of trusting merchants with consumer identity, credit card number, social security or their digital detritus from hours of browsing, dripping cookies through the cyberspace of disconnected lives connected for commercial and surveillance purposes through the Internet.

In a wired economy ruled by contract law speeding transactions faster and faster, the legal gymnastics of navigating what one’s rights are is attracting startups to build applications that can “read” what EULA or other document is being presented (e.g., EULAlyzer), interpret its variance from a “normal” contract or other document, and generate alternative verbiage as a negotiated compromise (e.g., Docracy).

Likewise, high legal fees for litigation drawn out over multiple years are being whittled down by various automated research and discovery services (e.g., Lex Machina for patents or Blackstone Discovery for litigation discovery), and mediation services to accelerate compromise or resolution of disputes in commercial, family and other litigation settings.

For lawyers, technology has moved beyond Microsoft Office’s Word  for creating documents, Excel for spreadsheets and Adobe PDF for storing documents.  Technology has now come to dominate the function of lawyering, and the tasksNYC Checker Cab that clients formerly paid only lawyers and paralegals to perform.

The technology-phobic lawyer, clinging to her barely “smart” Blackberry inside a New York City taxicab, may want to retool and reconsider the landscape created by technologies conquering the law.

The bedside manner of the national and state bar associations may not yet fully understand the profound changes coming to the practice of law.  To keep up with current trends, for starters, to glimpse into the future, check out Stanford University’s CodeX:  Center for Legal Informatics, where legal tech startup founders graze and launch from regularly.

Bruce Cahan

Bruce Cahan is CEO and co-founder of Urban Logic, a nonprofit that harnesses finance and technology to change how systems think, act and feel. He is an Ashoka Fellow, and a Lecturer at Stanford University's Department of Management Science & Engineering, a Distinguished Scholar at Stanford mediaX and a CodeX Fellow at Stanford's Center for Legal Informatics. Bruce was trained as an international finance lawyer at Weil Gotshal & Manges in NYC (10 years) and as merchant banker at Asian Oceanic in Hong Kong (2 years). Bruce graduated The Wharton School at the University of Pennsylvania (B.S. Economics 1976) and Temple Law School (J.D. 1979). Bruce has been licensed to practice law in California (2006), New York (1980) and Pennsylvania (1980).

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