How We Turned Real Estate Into Digital Assets
About two weeks ago, we started allowing people to buy portions of property via our Proof website. Here’s a breakdown of the steps we took to get property ownership rights onto the internet, and more specifically, the blockchain.
- We paid $5,000 for 1–2% stakes in two properties located in our home turf here in Seoul, South Korea. This consisted of having our legal wizard lawyer (and COO), Joe, draw up new kinds of contracts for us to A) legally buy fractional ownership in the properties with the right to resell them and B) use our resell rights to issue “tokens” (or fractional ownership) to users on the blockchain, who would also have the right to resell their tokens. These contracts also acknowledged the immutability of records stored on the blockchain in the form of a smart contract that would be later generated on Proof.
- We obtained the rights to put a lien on the properties, so that the owner could not sell the property and transfer their deed legally without at least paying us our $5,000 back. However, the contract A (mentioned above) stated that we would get the same percentage of the future sales price as the current price at the time we bought it. Meaning, we would make, percentage-wise, whatever the profit was made in a transaction in the future. That, with the agreement, we would pay that amount into the generated smart contract that kept up with all records of ownership for all future token holders to get paid out.
- We went and clicked on the blue “Create” asset button on the Proof Dashboard, and filled in all the information about the property, including an upload of our legal documents, descriptions of each property, property photos, as well as how many tokens were being issued and the initial price per token. Once we submitted the asset, a smart contract was generated that referenced the legal agreements and immutably set the number of tokens that could ever be issued (100,000) representing each fractional piece of ownership (or smart contract token). Boom! Properties were on an Ethereum-based blockchain. However, it wasn’t featured or searchable on Proof yet for users around the world to find and buy.
- Our screening team then reviewed the property owners’ deed records, our own liquidity, and finally approved the asset to be featured for the general public to find.
- Celebrated. We had the first real blockchain smart contract-based real estate assets.
- Watched as people actually came in and purchased property stakes. People we didn’t know. We got really frightened because this had never been done before.
- We got excited again. Now, we’re looking for more awesome properties to put on the blockchain, as well as adding more information about risk profiles of underlying assets, independent forecasts and and historical neighborhoods pricing data.
The blockchain revolution rolls on.