For Real World Assets (e.g. Real Estate) to come on-chain (e.g. as NFTs), there needs to be a way of linking the physical to the digital object in a trustless way. This seems impossible. Who is tackling this and what are the solutions?

Crypto @ Coinbase, foreign policy, political theory. yugacohler.twitter

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Why does it need to be trustless? 

Could come on chain in a trusted way and enforced by real world courts and contracts. Wouldn’t get all the benefits of trustless assets but could still get some.

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Because I’m assuming we want to build a decentralized financial system, not one that is dependent on enforcement by existing centralized sovereigns

I think trustlessness and decentralization are slightly different.

USDC is not trustless but it's traded on decentralized rails and is an improvement over wire/ach transfers. 

People may have problems with USDC but it's not a strict requirement to be trustless to be on-chain.

You may still prefer decentralized and trustless over decentralized and trusted but as you said, it might be impossible for physical to digital assets.