ROTTERDAM, 23 January 2018. BrickEX was invited by IBREA to have a talk about blockchain, real-estate, cryptocurrencies and ICOs.
The audience was a mix of real estate industry professionals ranging from lawyers, to developers to surveyors. One thing was for certain, even in this small group of interested individuals, nobody had a real in-depth clue about blockchain and how it could potentially be successfully implemented. Everyone knew about cryptocurrencies like the Bitcoin but they were all lost when asked who owns a nano ledger.
The idea of having interactive sessions was thrown out of the window almost before we even could start our presentation. Nevertheless we delivered not only our thoughts about blockchain and real estate but we also dove into the world of crypto currencies and ICOs.
Some of the main issues raised was around the question: How do you know that the property you (partly) buy on the platform is really owned by the seller?
There is currently no direct way to have the actual deed of the property as a smart contract. What happens now (also with property crowdfunding platforms) is that the property fund creates a Special Purpose Vehikel (SPV) this SPV owns either the economic and/or legal rights of the property.
An example to illustrate: in the UK a Limited is founded that buys the property this Limited company has 100 shares. This means that each share has 1% ownership of the property value and rental income. This Limited company will enter a smart contract and through this contract makes it possible to trade the claims on these shares in the limited company.
The forementioned question also addresses an important part of the BrickEX Exchange Solution: due diligence. Each Provider and property offering has to undergo thorough due diligence to ascertain that the Provider: a) actually owns the property and b) that the vehikel created for or around the property has the legal rights to transform the economic rights related to the property over to the smart contracts in the blockchain.
BrickEX intends to include the community to take active roles in verifying providers and properties at a regional or local level. Each verification will generate Brick Tokens for that authenticator.
Furthermore we anticipate that for the near future a crucial role needs to be played by attorneys and notaries in verifying property providers and property ownerships.
The power of blockchain is restricted to the quality of its input.