Can AI Disrupt Real Estate And Construction Industries With Blockchain In Finland?
In this post, I want to highlight some of the likely consequences to Finland’s future, in case we don’t quickly create a thriving ecosystem for Blockchain and AI-based innovation.
There’s been an active ongoing conversation in our country about our strict tax legislation in the past months in the context of Blockchain related businesses. The new Tax legislation from 2018 has been said to drive most cryptocurrency related companies and entrepreneurs away from Finland.
Mr. Mikko Alasaarela, the CEO of Inbot and frequent public speaker about all things Blockchain and AI, has been vocal about this subject. He has said that the recent new stricter tax policy introduced by the Finnish government has effectively made it impossible to do profitable business in the areas of virtual currencies as a method of payment. The CEO of Finnish State Development Company Mr. Taneli Tikka has voiced similar concerns on Twitter.
One of the challenges of the new regulation introduced in May 2018 is the fact that the government taxes every virtual currency transaction with its Euro value at the time of the transaction, even in situations in which the owner of the token cannot change the token directly to Euros. A large number of virtual currencies cannot be exchanged to fiat currency directly.
Another major issue is that cryptocurrency-related losses cannot be deducted when calculating taxes, which differs from for example stock-market investing where losses can be deducted from tax calculations.
In many ways, the strict approach to taxing cryptocurrencies comes as no big surprise in our welfare society which requires substantial tax income to function well. It doesn’t help that the public often associates cryptocurrencies with the gray economy and tax evasion.
What often gets misunderstood is that a proactive and positive way of viewing public Blockchains as the emerging “internet of value” could lead to a situation where the authorities could verify the financial activities of citizens with much higher accuracy and transparency than is possible today. In other words, intelligent adaptation of Blockchain and cryptocurrencies into Finnish economy could eliminate many of its current tax evasion loopholes, such as untaxed cash transactions.
Right now the Finnish government has taken a rigid, and almost punitive, approach towards individuals and companies operating in the cryptocurrency space. There’s a legitimate risk that the decisions by Finland’s policymakers may also have an unintended impact on vital sectors of our economy such as real estate and construction industries in the future.
Paradoxically, while our government is actively hindering the development of a cryptocurrency and Blockchain based business ecosystem in Finland, our government is simultaneously investing significantly in making our country one of the leaders in the field of AI and by supporting the digitalization of construction and real-estate businesses.
Herein lie potential blind spots, which would be essential to take into account.
Data As The New Gold
Big data is needed for AI to work in a society changing scale. We need to incentivize organizations operating in construction and real estate to share their data to make AI work well.
In the future cryptocurrencies will be by far the best way to compensate for transactions made in the digital sphere.
If a company shares data about their construction process optimization improvements with other companies anonymously, these companies could pay for the data they use with Blockchain powered token system. Payments could be made instantly and with virtually no transaction costs.
If companies cannot implement the Blockchain based token systems for data exchanges due to the restrictive legislation in Finland, all incentivized data exchange initiatives would have to rely on old fashioned bank payments, which come with unnecessary middlemen, costs and delays.
The dream of having an AI help the real estate and construction industries to become more efficient cannot be realized without massive amounts of quality data from the field. In case companies and organizations cannot be incentivized to share big chunks of their data seamlessly, this dream of AI-powered real estate and construction industries may never come into full fruition.
Tokenized Real estate Ownership
Owning property is one of the fields that will be disrupted by tokenization made possible with Blockchain. By creating Blockchain based funding systems for real estate, we can introduce tokenized securities, which will add new forms of liquidity and fractionalized ownership for the market.
A real estate project offering tokenized ownership could allow anyone to participate in the funding, which could bring a large amount of new capital for the market. A funding app in the future could allow, for example, a bartender or a nurse to purchase 0.00001 of a new shopping centre with a few clicks. It would also allow real estate investors to be able to liquify their stakes in real estate assets with a few clicks around the clock.
An AI-powered investment app could operate tokenized real estate ETFs that would invest in real estate projects happening in the most lucrative areas based on predicted trends based on big data.
If viable Blockchain related businesses are driven away from Finland by our government’s policies, we may be left behind in the development of tokenized real estate ownership. AI-based investment decisions would still require the old fashioned industry to act on the data with old methods while paying large sums for unnecessary intermediaries.
It’s terrific that Finland is investing so much in AI development and the digitalization of real estate and construction industries with initiatives such as KIRA-digi.
However, if the shortsighted policies of the Finnish government continue, Finnish companies can only get half-way in reaping the full benefits of AI. Many other countries have legislation in place that allows their local companies to go all the way to the end by combining the best parts of AI and Blockchain.
Our country still has time to get back on the right track. I sincerely hope our leaders will quickly see the interrelations between AI and Blockchain and will start working on creating an ecosystem in which Finland can take the lead in innovation.