The many uses of blockchain and cryptocurrency for real estate or asset-backed tokens — the way forward for cryptocurrencies to go mainstream?
Since the end of 2017 we’ve seen projects like Atlant.io (Market Cap USD 2.1M), Real (Market Cap USD 3.2M+), Propy (Market Cap USD9.6M) getting traction from the general public. These projects aim to solve issues in the real estate market and give access, liquidity and transferability to real estate assets.
Why? Because the real estate industry is worth USD 200 trillion and the potential in this industry is astounding. Traditional real estate and the construction industry are brick and mortar business that for the major part of the world are still stuck in bureaucratic, costly and cumbersome operations.
The current structure of realtors, transaction fees and paperwork linked to owning a real estate asset is the reason why many large and institutional investors will go for a REIT or invest into shares of a company instead of putting the money into the asset itself.
Most of the projects above are solving one of the issues mentioned, Propy and Real makes selling and buying property internationally easy through transactions registered on blockchain and through crypto payments. Atlant offers an exchange for users to exchange property shares and also a platform to rent and lease property with nearly no fees and an incentivized arbitrary solution.
The main focus of all real estate ICO’s focused on the transaction part is that they have a solution on blockchain to allow many buyers to purchase a property thus giving them the right to participate in investments they could not before due to the high-barrier nature of these investments. It is also a great solution for real estate investment markets that are low in liquidity to attract FDI (Foreign Direct Investment), through either crypto or by lowering of the barrier and crowdfunding of projects.
Government and land department branches in Dubai, Amsterdam, Sweden etc… are now looking at putting their registration, title deeds and entire real estate process on blockchain because in the not so distant future it will allow the decentralization of real estate in their markets. It offers more security for the title deeds, an immutable public record of who sold and bought at what price accessible to everyone and finally it will allow the fragmentation of a single asset into innumerable smaller pieces.
Imagine being an investor, you have several properties worth overall USD 1M and returning 8% annually. You have an opportunity that requires 500k USD in cash and could make you millions. Instead of going to the bank, you could partially tokenize your assets, for example 50% of all the properties and guarantee anyone who would buy those property tokens 8% return. You would get liquidity, the buyer would get diversified property tokens and ROI and all this for a fraction of the time and cost it would take you to sell or find financing solutions from an institution.
In an ideal world you could buy out the property tokens back from the market at the same price you sold them when you have finalized your transaction but most importantly it will offer you the flexibility to transact and leverage assets into cash in minutes that might have taken.
Why is this important ? Because current financing fees are very high in emerging markets, central bank rates in the world are rising, real estate markets have not been liquid since after the mortgage crisis in 2008 and we are seeing more and more alternative financing schemes appearing in Fintech’s around the globe.
These problems cannot be solved by innovation entirely as they are a result of our capitalistic society and its need to amass wealth, control monetary policies (interest rate), which will not change through innovation — only through a cultural shock that the emergence of crypto-community and real p2p payments might one day provide.
If communities want to change the status-quo and truly find a way to re-imagine the economy the solutions proposed by the different platforms have to be all encompassing, touching to every bit of the industry where they look to introduce crypto.
In an ambitious and idealistic way that is what a company such as the Umbrella platform aims to do: re-imagine the real estate life cycle with a top down approach.
In the case of the real estate industry technology has provided several solutions which make the process of building real estate more efficient through the efforts of BIM consultants that provide more and more accurate pricing estimates, timelines and software that analyzes and extrapolates data. The new tools at the disposal of architects, engineers and project managers has made the cost and time management of projects in real estate much smoother however the fund raising process and the overall payment system during construction, monitoring and sales is still very similar to the way it was done in the beginning of the 20th century.
Even though these technologies exist and are meant to make construction more efficient in an effort to curb down sales prices we witness that in different markets the construction business is still plagued by old business mentality with under the table deals, 10% rebate, government corruption etc. It will be increasingly hard to introduce a token system for all businesses to participate in unless you create a life cycle that encompasses all areas of the construction from procurement (exchange of goods and services) to sale of finished or unfinished square footage.
In the early phases of construction crowdfunding is not a new concept, it is already happening but at a high barrier/level. Bringing this to a lower barrier and letting people participate at an early stage is also one of the operational use cases of blockchain and crypto.
U-Platform aims to tackle this problem by enticing companies to participate in a tokenized closed real estate life cycle. We aim to incentivize developers and owners to crowdfund their project on our platform for 0 cost as long as they use our escrow wallet and stable token to pay for goods and services and crowdfund/sell their property tokens on the platform. Once the developers/owners on boarded we approach the providers of goods and services to onboard on U-platform and explain the token process (1 Anchoin = 1 USD). Finally we create a gateway token that represents the company ideals and gives a reward system to the holders of this token — U-Coin. The gateway token will allow all participants of the market to exit onto other exchanges or for Anchoin holders to exchange tokens against USD.
The only constraints that we are seeing at the moment is not from the centralized regulators worldwide but from banking institutions in the middle east that are reticent in working with crypto operating companies therefore we wish to establish our exchange in Gibraltar or Malta where the forward thinking banks are more susceptible to develop long-term relationships with asset backed exchanges. Asset backed tokens will be regulated both in Malta and UAE but the process of exchanging them will be ring-fenced in Malta where the company will hold all the appropriate licensed and be fully compliant with the EU member.
In essence this is how we see the real estate crowd funding of the future:
Propose a building on our platform — token holders vote and rate projected quality/timeframe/ROI and decide what project we will onboard.
The developers chosen then get access to our platform and market themselves to the token holders in bids — token holders get rewarded for participating in the marketing campaigns. The funding period is no longer than 3 months and allows crypto holders to keep this as an ICO pace with a fixed date of entry and exit. Once the funding is finished the participants receive their asset-backed tokens and can access a secondary exchange where they can start trading.
Holders of the asset-backed tokens will have access to the progress of the building through a BIM system and online progress monitoring of the system.
When the project is finished a management company represented/chosen either by the developer or U-platform will ensure that the project is fully leased/rented and the proceeds of the rent will be distributed on a quarterly basis to U-coin users.
For hodlers of Bitcoin/Ethereum or any other token the intra day volatility is higher than any equity holding. Anyone who does not wish to exit the tokenized p2p system wants a token that provides growth opportunities, ROI to invest into other tokens and much less volatility. Tokenized real estate ticks all the buttons and that is why we believe that it is the future of cryptocurrency and a whole new way for real estate cycle to be managed.
In creating a beneficial cycle where all participants are incentivized either with no financing fees, no wait on transfers, direct marketing to real buyers, developers fully funded for projects, payments waiting in escrow wallets or low barrier participation we captivate the full potential of both blockchain, crypto and crowdfunding to create a unique and innovative platform that will become the new standard for crowdfunding real estate through crypto in the years to come.
If you are interested in learning more about U-platform please go ahead and read about it on www.umbrellaplatform.com. We will be very happy for the communities to give us constructive feedback and participate in this platform. We have a very special ICO on the way that we will be divulging in the next few months and that will let investors and idea generators to get everything they want out of an ICO.
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