Off the Blocks | Vol 84, September 10, 2019
|Sep 10||Public post|| 5|
At Proteum, we partner with entrepreneurs to develop and deploy innovative products and solutions built with blockchain technology - advising them on building sustainable companies in a rapidly changing investment, regulatory and tech landscape.
The Hidden Value in Real Estate
The first reported blockchain based real estate transaction was in 2016 - a house in Denmark, in the town of Morkov, Sealand, he largest and the most populated Danish island, was sold for 117 Bitcoins. The regulations and compliance still needed to be maintained via existing ledgers and a third party acted as an escrow until AML and KYC checks were completed. Back in the day, blockchain technology was not used to register the ownership of the property, taxes paid, utility bills etc. It was purely a financial transaction.
In October 2018, Elevated Returns closed an $18 million tokenized real estate offering that incentivized a fractional ownership stake in the St. Regis Aspen Resort. The token sale, structured as a security token offering, was a fundamentally new way of investing in real estate assets. This tokenization of real estate was only made possible with a blockchain platform, that provided the necessary security and transparency that allowed small investors to easily own a fraction of the luxury hotel. Through an exchange, the investors can potentially access liquidity in secondary markets, in case they want out at any time. In practice, the tokens are locked up for some time (at least a year in the US) pursuant to local regulations.
Each Aspen Digital Token will represent an indirect ownership interest in one deposited share of our common stock (the REIT which was formed for St. Regis Aspen). Essentially you have best of both worlds with REIT structure in place and blockchain technology with smart contract for St. Regis Aspen. The REIT provides tax efficient structure while the blockchain provides peer-to-peer investing and cross-border transaction made simpler for investors.
- Elevated Returns
The attractiveness of this model is real and is catching on slowly but steadily. In June, the AnnA Villa in Paris made history by becoming the first ever European property to be sold entirely via blockchain transaction. Elevated Returns, now has plans to tokenize $100m of real estate in Thailand this year, while UK-based Brikcoin is embarking on a mission to use blockchain technology to build affordable housing.
At its core, advancements in real estate technology have mostly been centered around listing assets and and connecting buyers and sellers. Through a tokenized offering, real estate assets can be traded much like stocks on an exchange and transactions can be completed in real time online. From a business model perspective, blockchain introduces a new way to trade real estate. In due course, this will almost certainly give rise to new kinds of exchanges, focused on real estate transactions, enabling trading platforms and online marketplaces to more comprehensively support the investor needs.
Beyond liquidity, tokenizing real estate processes provides various advantages over the traditional methods of records management for real estate assets. In the case of the AnnA Villa, most of the legal paperwork associated with the sale of real estate such as notarized deeds, proofs of identity, income etc. was encrypted and recorded on a blockchain. Processes like loan approval, title, and escrow can all be made more efficient and secure while eliminating redundancy of information.
Blockchain technology brings efficiency by creating recording processes that verify all parties' identities, ownership rights, and available funds in real time. Key data about a property can easily be recorded and made available for future owners and investors. This enhanced efficiency itself provides for an economic incentive to adopt such processes over manual recording and verification processes.
The benefits certainly do not stop here. The global real estate investment market is valued at $8.7 Trillion. Expect to see a lot more startups play in this field, creating solutions that may not be apparent today. Incumbents will certainly try to keep pace with the developments and work towards interoperability with legacy technology while pushing for standardization of smart contracts and other blockchain parameters across all ecosystem participants.
Now some significant news form the world this week:
Browsers | Decentralized Brave Browser Tops Chrome in Google Play Rankings in Japan: According to a Reddit post on Sept. 8, this is the first time that the privacy-focused Brave browser has overtaken its rival browsers such as Firefox, Opera and Chrome in Japan. The most recent ranking data from Google Play shows that Brave sits comfortably at number 10 on the list, while its closest competitor Firefox lags behind, occupying 14th place. A Google Play ranking is determined by how well apps perform against several key metrics such as crash rates, app-not-responding rates, excessive WiFi, location or processing in the background. Brave was apparently downloaded 2 million times last month, while Firefox only saw 553,000 downloads. Brave tries to win market share from traditional browsers by tokenizing certain aspects of the internet browser experience for users. Brave users can earn the browser’s native Basic Attention Token (BAT) by watching ads and claiming grants. The token can subsequently be used to tip content creators on sites like Reddit and Vimeo. [… Read More on CoinTelegraph]
Fintech | HSBC Processes First Blockchain Letter of Credit Using Chinese Yuan: HSBC completed the first yuan-denominated blockchain-based letter of credit transaction. As the first such transaction to use the Chinese currency, this deal marks a step forward in the use of the Voltron trade finance platform, developed by eight banks including BNP Paribas, and Standard Chartered as well as HSBC. So far transactions using the platform have primarily been individual pilot cases, but Ajay Sharma, HSBC’s regional head of global trade and receivables finance for Asia-Pacific, said that progress was being made toward a full proposition, and what could be a commercially acceptable model for banks. The exchange of the electronic documents was completed in 24 hours, compared to the typical five to 10 days for conventional document exchange. [… Read More on Reuters]
Automotive | Daimler Will Use a Blockchain Platform to Track the Value of Used Cars in Real Time: Beijing Mercedes-Benz Sales Service (BMBS), an automotive sales joint venture between German automaker Daimler and Chinese automaker BAIC Motor, will use a blockchain platform to track used car value in real time. BMBS will use a blockchain platform developed by PlatOn, which sends real-time vehicle data to approved recipients to share static and dynamic vehicle data with approved local dealerships, vehicle inspectors, and used car owners. In turn, this could help BMBS increase buyer confidence in its used car inventory, as it can provide more granular data on car history and adjust the price accordingly. Ultimately, it could bolster BMBS's share of China's growing used car market. [… Read More on BI]
Interoperability | Blockchain Interoperability, Explained: Let's imagine a world where blockchain actually gains mass adoption. Every company uses a blockchain to store data. Now, the following scenario occurs: A person needs to be hospitalized and while he or she is being transported in the ambulance, the hospital requests their medical records from the clinic where this person is registered in order to develop the best treatment. However, it turns out that the clinic uses a different blockchain, and it is not compatible with the hospital’s ledger. As a result, the hospital is unable to access the patient’s files. Meanwhile, the clock is ticking and every second matters. Thankfully, this will never happen: No hospital would not choose to rely on a blockchain if it is an isolated one. This also applies to other industries like real estate, auditing, logistics and so on. Mass adoption is not possible if there is no blockchain interoperability. [… Read More on CoinTelegraph]
Tokens | Telegram Finally Releases Code for Its $1.7 Billion TON Blockchain: Telegram’s blockchain project, TON, has entered the last preparation stage before going live. The code for running a blockchain node was released on the test network portal late Friday. Now developers and community members interested in the messaging app provider’s blockchain can start kicking the tires of a full node, a validator node and the blockchain explorer. According to Mitja Goroshevsky, CTO of TON Labs, which is working on tools for devs, there are currently 100 nodes maintained by Telegram itself on the testnet. Several more are maintained by his startup, helmed by investors in Telegram’s token sale, which raised $1.7 billion in early 2018. Telegram’s blockchain is designed as a proof-of-stake protocol with the support of multiple “shardchains.” Validators, chosen from among those users who stake considerable amounts of tokens, will confirm the blocks. [… Read More on Coindesk]
In 2017, the average Spanish citizen read an average of five hours and 48 minutes a week. This may not seem like that much, yet Spain ranks among the top 20 countries in the world that read the most. Moreover, many people still use public libraries – most of them teenagers and young adults aged between 14 and 35. Public libraries, especially in the large cities of Spain, have been implementing a series of measures to meet the needs of the younger generations. Most of them have enriched their collections with eBooks, magazines, works of art, travel guides, and even films to improve the user experience. Most have study areas with free WIFI and provide additional services to encourage reading and studying. From smart contracts to tracking transactional data, blockchain technology can benefit Spanish society in more ways than one. IT professionals working in private and public libraries could use it for building and securing data centres, record keeping, and many other applications besides. [… Read More on Yahoo!]
Proteum is a global blockchain investment and advisory firm that works with public, private and start-up companies to help them transition into the world of blockchains and decentralized applications. We help companies strategically build their ecosystem and unique capabilities so that they can own and control their future. ProteumX, our accelerator program, invests in and accelerates the time to market for startups and emerging ideas based on blockchain solutions.