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Blockchain Financial Services Technology

Blockchain testing MakerDao's stablecoin platform

As the cryptocurrency bear market continues, investors are looking for much-needed predictability. Stablecoins have risen in popularity as the market tumbles. Several have emerged, but few are as transparent as MakerDao . Maker had Espeo Blockchain testers check to make sure everything worked properly before they launched. Since the technology is so new, blockchain testing is vitally important for any project if you want to keep the trust of this fickle market.

Cryptocurrency is having a bit of an identity crisis lately. Some extoll utopian notions of freeing consumers from banks, while others see a way to make money. It was this unregulated asset speculation that spurred investors to flock to cryptocurrency late last year. Unsurprisingly, speculation in such a constrained asset class caused wild volatility in the market.

Market volatility, of course, is not good if you’d like to actually use cryptocurrency as a currency. One solution to this is the stablecoin. Stablecoins are crypto tokens with fiat currency or other more stable assets backing them. Similar to pegging a weak currency to a stronger one, stablecoins ideally lend confidence to those who hedge with them.

The Stablecoin

Centralization and dubious fiat backing are some current criticisms of stablecoins on the market. Users have to trust a central authority that the company issuing the tokens actually has the funds . But just like pegged fiat currency, stablecoins introduce much-needed confidence into the token economy.

Espeo Blockchain helped MakerDao with blockchain testing before launch. Unlike other stablecoins, Maker issues their Dai tokens using smart contracts in exchange for Ethereum. Head of business development, Gregory DiPrisco wrote in a company blog post from earlier this year that Maker operates in a similar way as a bank, just without the middlemen. The platform aims to introduce stability into the cryptocurrency market with its Dai token. Ether collateral backs each token. MakerDao reduces volatility and allows users to maintain their purchasing power with crypto assets.

” Pretend you are at the bank asking for a home equity loan. You put up your house as collateral and they give you cash as a loan in return… just replace your house with ether, the bank with a smart contract, and the loan with Dai.”

Of course, just as the bank might take your house if you can’t repay the loan, Maker automatically resells ethereum collateral if it drops below the value of the Dai loan. This mechanism maintains the integrity of the system and keeps the price stable. As prices drop, though you might think that the system would unravel. Mike Porcaro, head of communications at Maker remains positive, however. In an email interview, he said:

“Maker is unlocking the power of the blockchain for everyone by creating an inclusive platform for economic empowerment — allowing equal access to the global financial marketplace… The currency lives completely on the blockchain; its stability is unmediated by any locality, and its solvency does not rely on any trusted counterparties.”

Collateral debt position

MakerDao’s CDP portal holds a surplus of collateral in publicly auditable Ethereum smart contracts. Users can use Dai tokens in the same way as any other crypto. Users can send Dai to others, pay for goods and services, or save them long-term. Creating a Collateral Debt Position (CDP) allows users to protect their ETH assets with Dai stablecoins. Porcaro went on to say:

“People or organizations create Dai by locking-up ETH in a CDP. As long as people can open CDPs there will be Dai in circulation. [Maker is] seeing increased volumes of Dai in circulation. In fact, about 1.5% of total ETH is locked up in Dai smart contracts.”

The hope is that the system will encourage more people to use cryptocurrency as a medium of exchange. Stability is essential to achieve this.

Blockchain testing

Espeo Blockchain helped MakerDao with blockchain testing before it went live. Checking how usable the platform is, and the security of the smart contract code is critical in a blockchain project. This process ensures that the system functioned properly before people started putting their money in. Head of product, Soren Nielsen agreed to hire Espeo when his team needed assistance with testing the MakerDao platform. Nielsen explained in an email interview:

“We needed immediate assistance with testing a product, [so] we decided to “test the waters” with Espeo… A challenge we currently have in general when engaging new suppliers is that there is a steep learning curve unless you’re already a user of our system… I felt that we had a professional client-supplier relationship. It certainly was good to have a dedicated project manager following this from Espeo.”

Finding bugs to fix

Project manager Natasza Stanicka and testers Bartosz Kuczyński and Patryk Jaruga got to work trying out every aspect of the platform looking for bugs to fix. They had to methodically sift through every feature and behave just as a regular user would. Kuczyński recalled:

“First, we clicked through every clickable item and went through every user story and tried to find edge cases. I guess the challenge with that was the fact that it is a blockchain application and that has certain consequences in itself. We needed to make sure that it actually cooperates with the blockchain correctly and the results were accurate.”

Jaruga remembers finding a bug which interrupted Ethereum transactions between hardware wallets. He said that every device behaved a bit differently in transactions and that they tested the Maker platform with a range of hot and cold wallets. The Maker team fixed the bugs as soon as they knew about them, said Bartosz Kuczyński. He added:

“Maker’s development team was really interested in bug reports, and they dealt with them immediately. In that respect, I believe this was really very ‘well-oiled.’ The bugs were corrected immediately so we would be able to move on to the next thing. The overall attitude of the company was certainly very positive.”

Testing such a complex application ensured a successful launch. Since MakerDao relies on consumer trust, getting the calculations right is vitally important. Blockchain testing involves a lot of things. Tokenomics, UI/UX, and hardware compatibility are some of the aspects our testers analyzed. In order to maintain the integrity of the token system and preserve the public’s trust, making sure the app works as promised was essential.

Conclusion

Dai stablecoins and the MakerDao infrastructure goes a long way to stabilize the cryptocurrency ecosystem. For more people to adopt crypto and start using it as a medium of exchange, easing price volatility and uncertainty have to happen. Dai’s stability helps users hedge their Ethereum assets and protect their investments from wild swings in the market. Blockchain testing ensured the platform worked properly before launch. More than anything else, confidence in blockchain technology will encourage wider adoption. Knowing that you won’t lose everything overnight will spur more people to start using cryptocurrency.

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Blockchain Financial Services Technology

Blockchain art: Opening new avenues for artists and collectors alike

Blockchain art is a bit of a paradox. The highly technical and the highly creative generally don’t mix well. However, several recent projects are bringing the two worlds together in fascinating ways. Blockchain technology is not only a tool for artists (and collectors) to protect the value of their work. It’s also increasingly becoming a medium of expression. Digital artists especially can now control the authenticity and scarcity of their work with the help of distributed ledger technology. Ownership titles, provenance, and even art asset tokenization are a few of the compelling use cases emerging.

But more than simply controlling the flow of distribution, blockchain art also opens new avenues for artists to engage a broad community of connoisseurs and enthusiasts. Even the notoriously conservative art and collectibles market is slowly starting to adopt the technology to establish provenance and facilitate art sales. Several cutting-edge startups are working on blockchain applications in the art world. Blockchain art may fundamentally shift how artists create and how collectors collect.

Blockchain art market

Elena Zavelev, CEO of the New Art Academy believes digital artists will benefit the most from DLT. She wrote in Forbes, “For the first time ever, limited editions of digital art are possible thanks to blockchain technology. Digital artists can create limited editions of their works, providing a new way to grow their market. Previously, the bane of digital art has been the fact that it’s easy to copy and pirate.”

Projects such as CryptoKitties and CryptoPunks were among the first examples of editioned blockchain-based art. Art projects as much as technical feats, the unique figures demonstrate blockchain technology’s usefulness in this sector in a way for everyday people (like me) to easily grasp.

Each CryptoKitty and CryptoPunk is unique and cryptographically secure. While these original works are cute, there are deeper implications for artists and other content creators. Once a collector buys a CryptoKitty, no one can forge the originals thanks to the ERC-721 token. Think of them like baseball cards without the central authority. While blockchain technology guarantees uniqueness, it also limits distribution making these digital assets more valuable for collectors.

Radical Shift

Price speculation in CryptoKitties threatened to collapse the Ethereum network late last year as collectors flocked to buy and trade the exclusive cartoon cats. Some even sold for hundreds of thousands of dollars as interest peaked. Many criticized the craze as frivolous but failed to see the bigger picture. More than a way to speculate, this decentralized ownership model for an original digital artwork is a radical shift in the art world.

Immutability is useful for both artists and collectors. Unchangeable authorship information, for example, allows living artists to prove that their work is original. Once an artist sells a work, a record of its sale also goes onto the blockchain linking any future buyers to a clear history. Buyers benefit from investing in an immutable digital asset.

Blockchain as medium

Artists are also taking blockchain a step further and incorporating it into their work. Brooklyn-based platform Snark.art calls itself a blockchain art laboratory. The startup aims to change the relationship between collectors and artists. According to chief marketing officer Fanny Lakoubay, who spoke to me over Telegram, ”Snark.art is producing conceptual art experiments on the blockchain with established artists who want to reach the crypto community and get traditional art collectors to discover complex and conceptual digital art projects.”

Their first collaborative experiment in blockchain for art is Eve Sussman’s 89 seconds atomized. The video installation is a reimagining of Sussman’s 2004 video installation 89 Seconds at Alcazar. In the original work, Sussman recreated the moments prior to and just after Velasquez’s masterwork Las Meninas in film. In 89 Seconds Atomized, however, the artist split the video installation into 2,304 atoms at 20 x 20 pixels each. Collectors can buy individual atoms — similar to asset tokenization — and decide whether to display their atom to reconstruct the work, or not.

Lakoubay explained that owning a piece is slightly different than fractional ownership. “[Collectors] own an atom entirely,” she said “and can decide what to do with it without having to have consensus from all other owners. It is a choice for you to take part in the buyer community to reconstruct the original work by lending your piece.”

Community experiment

89 Seconds Atomized is not only an art installation but also an experiment in digital ownership and community. Users can view their own atoms on the platform, or either borrow or purchase atoms from other users to view it. Snark.art also encourages the community to organize their own screenings. Granting access to individual atoms is a defining aspect of the concept. 89 seconds could not exist without the blockchain, it is part of the medium of the work,” Lakoubay said.

What’s so groundbreaking about the installation is that it’s a conceptual artwork first, and an investment vehicle second. The community of atom owners is as much a part of the work as the film itself. Though both have implications for the art world. Art has a unique advantage in teaching a broader public about how blockchain technology works through accessible lessons. Ownership, permission, and peer-to-peer transactions are just some of the benefits blockchain technology lends to the art world. Of course, it’s also another way to speculate on price. As art enters its own asset class, investors look to blockchain art as an asset that accrues value.

Not only digital art

Digital art is not the only medium decentralization is starting to change. Some startups and more established players are looking at ways blockchain can enhance the trade in physical art and other more tangible collectibles. Just as digital art benefits from an immutable record of ownership, the more conventional art market is also adopting blockchain innovations. Similar to digital blockchain art, authenticity and a clear provenance increases an artwork’s value and reduces friction in the traditional art market.

For art collectors, provenance is an essential consideration. Investing in a fake, or stolen artwork is an expensive mistake few would like to make. However, the global trade in art and collectibles is a shadowy, unregulated market. One where you have to trust many different actors. Art fraud looms whenever a work comes up for auction. Auction houses hire teams of experts to verify the authenticity and clear provenance of any work before it sells it. Unsurprisingly, this costs both time and money. Blockchain technology could help manage all the parties involved. 

Art Fraud

A 2013 case involved a woman named Glafira Rosales who claimed to be selling previously unknown 20th-century paintings from masters such as Mark Rothko and Willem De Kooning. Instead of being genuine paintings, a Chinese painter was mimicking the artists’ styles and “aging” the works with tea, or dirt. She sold a total of $80 million dollars worth of fake art before the fraud was uncovered.

While blockchain may not help directly in preventing theft, it can help establish ownership as well as a history of transactions. One of Espeo Blockchain’s developers Krzysztof Wędrowicz believes blockchain technology could help auction houses and buyers spot fakes. “Let’s say each artwork could be digitized into a cryptographic print,” he said. “This proves that even if someone would forge a piece of art — to create something which is really really similar, in terms of what your eye can see — you can’t see the difference. With a blockchain, you can prove that a work is not authentic.” 

Currently, a work has to have an extensive review each time it comes up for auction. For an effective title registry to work, however, an expert or centralized institution will have to establish provenance, to begin with. Wędrowicz admits that “You need some authority to start with — so yes it’s some kind of risk.” However, several startups are developing novel ways to track provenance and authenticity using blockchain technology.

Decentralized title registry

One project addressing the provenance of art and collectibles is Artory. According to the company’s website, it’s a decentralized title registry for art and collectibles – a $2 trillion-dollar market. Currently, this asset class lacks a central registry. Artory stores vital transaction data and the history of ownership, and is easily accessible to all parties involved. Wide adoption, they claim, will help reduce costs and give investors more confidence.

Adoption across the art market, of course, will depend on how stakeholders will perceive the change. Artory remains confident that large stakeholders will see the benefits. Previous efforts to keep a central registry have failed largely because collectors don’t trust central entities with their information and intermediaries would like to keep their jobs. However, due to the decentralized nature of Artory, more stakeholders are willing to accept it, they claim.

Last month, Christie’s concluded the sale of the Barney A. Ebsworth Collection of 20th-century art. The record-breaking auction brought in more than $320 million. The auction was not only hugely profitable, but the sales were also recorded on Artory’s decentralized, public blockchain.

Provenance tracking on a blockchain could add more transparency to the art market and facilitate valuations, provenance studies, insurance claims, and even asset-backed lending.

Art Asset Tokenization

Similar to 89 Seconds Atomized, investors can also own individual pieces of physical artwork. Art asset tokenization enables many investors to own parts of an asset. Real estate asset tokenization is another industry where companies are using blockchain technology to tokenize.

Developers claim that blockchain art asset tokenization will add more liquidity to the market encouraging more people to invest in smaller units. Fractional ownership gives investors the chance to own small parts of famous works of art.

Blockchain advisor Francois Devillez has written extensively on asset tokenization and believes it’s the future of blockchain


“[Asset tokenization] works as follows,” Devillez told me. “Let’s say you have a house, you bring the house into a company and you tokenize the share. So you don’t tokenize the asset itself directly. With art, you associate a token with ownership. When you sell the art, you sell the token with it.” Unlike digital art, tokenizing tangible art is more about representing ownership.

Fractional Ownership

Art startup Maecenas is already tokenizing art assets. Maecenas is an unabashedly investment-focused platform looking at art assets as a way to make money. Art sold on the platform is stored in safe facilities far away from the eyes of the public. Nevertheless, for investors who view art as an asset class, this is perfectly natural. 

In a conversation over Telegram, Macaenas press spokesman Mayank Jain said, “we are pioneers in asset tokenization and we firmly believe in its financial potential to reinvent some industries such as the fine art market. But [asset tokenization] shouldn’t be an end in itself. The disruption lies in the value proposition behind the technological process.”

Greater Liquidity

Maecenas claims that splitting million-dollar paintings into smaller pieces will open the market to greater participation. Liquidity is the main argument for this kind of innovation. As in real estate asset tokenization, being able to quickly buy and sell smaller financial units of large assets will allow smaller investors to react to enter the market.

Maecenas’ platform runs on a public, decentralized blockchain to keep all transactions transparent and to protect the company from insider trading, according to the company’s whitepaper. When an owner wants to sell a piece of art, he or she first has to put it up for sale on the platform. Investors bid with the company’s ART token using smart contracts. Once the auction finishes, the smart contract calculates the final share price and the number of shares each investor receives. The seller then receives either ART tokens, or an equivalent crypto or fiat currency.

“Maecenas’ proposal is not just a theory,” said Jain. “Our platform is a tested and proven fractional ownership model. In September, we successfully tokenized and auctioned a 31.5% stake in Andy Warhol’s 14 Small Electric Chairs (1980), collectively raising $1.7m, and recently we revealed Project Phoenix — our upcoming sale of a tokenized Picasso.”

“Project Phoenix will be the first ‘perpetual’ digitized and tokenized work of fine art,” Jain added. A single ERC 721 token and a fixed number of ERC20 tokens will represent ownership of the physical asset. Similar to owning stock in a company, holding tokens gives investors voting power for key decisions in the painting.

Unfortunately, tokenizing the paintings makes them difficult to view in person. Each goes into a safe storage facility in a “freeport” such as Singapore’s Le Freeport. Keeping art stored in these facilities allows investors to avoid high taxes involved in selling luxury items.

Conclusion

Blockchain technology is revolutionizing the art world in a number of fascinating ways. From cutting-edge blockchain art, asset tokenization, and decentralized title registries, blockchain tech is driving innovation in the space. Blockchain not only controls the distribution of digital assets, but also records vital provenance information, and opens the market to investors. Many of these projects are still in their infancy but have also demonstrated successful use cases for the technology.

Images in order of appearance:
CryptoKitty
Las Meninas Diego Velazquez 1656-1657
Chop Suey Edward Hopper 1929
Big Electric Chair Andy Warhol 1967

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Blockchain Software

How can blockchain contribute to B2B process improvement?

Blockchain technology shows promise in several key sectors. While it’s far from a cure-all, some key aspects could aid businesses in their process improvement strategies. Cutting waste and inefficiencies from business processes remains a challenge — one that blockchain technology could address. Below are some cost reduction examples blockchain technology could work to improve.

Sectors from real estate to charitable giving have begun to implement blockchain technology to innovate and compete in a fast-changing market. One field which could greatly benefit from blockchain is B2B. Process improvement and cost reduction brought on by the technology could increase profits and boost the industry to new heights.

B2B process improvement strategies

Business-to-business companies often deal with unnecessary complications. The behemoths of the industry such as Alibaba still use antiquated technology to handle their processes. Wide adoption of blockchain technology in the industry could improve processes and reduce costs for enterprises. As global commerce increases, the complexity and number of actors increases.

Businesses can benefit from implementing innovative solutions to increase their competitive advantage. One of many process improvement strategies is to save time and streamline international shipments. Some other cost reduction examples include automation and supply chain improvements.  When a buyer orders a product, the transaction can take weeks to finalize. The usual intermediaries slow the process. Lawyers, red tape, logistics agents, and banks can delay a transaction unnecessarily. 

Many B2B companies still use electronic data interchange technology or EDI (Electronic Data Interchange). According to a 2015 eft survey, B2B business owners and stakeholders believe that EDI is outdated and should be replaced by better technology. Here are a few process improvement strategies blockchain could address.

Eliminate expensive third parties

Smart contracts enable sellers and buyers to scrap expensive third parties and automate business processes. Blockchain smart contracts are transparent features that automatically bind all the parties involved. The smart contract is a set of cryptographic codes which only verified participants can access.

Once the data the participants give correlates with the existing data, it automatically executes. This is one of the biggest cost reduction examples as I’ll mention below. No one can alter the data once it’s on the chain. This makes it immutable, and since blockchain is a distributed ledger, the smart contract has no single point of failure. Even if one node goes down, the system can still operate. 90 percent of B2B stakeholders have realized the benefits of smart contracts and there’s no going back.

Automate data processing

Blockchain processes data in real-time, making it one of the best process improvement strategies for B2B companies. For instance, sellers will be able to access data on their e-commerce portal and see as the numbers add up. This will help sellers make decisions based on the information instead of waiting for weeks before calculating the data before making decisions. Blockchain will reduce the time lag, therefore, sellers will be able to carry out other tasks without delay.

Improve supply chain

Aside from the other process improvement strategies, smart contracts will provide for B2B companies another important benefit of blockchain is supply chain enhancement. Blockchains are a chain of distributed ledgers that process data autonomously. This means that for B2B, sellers can depend on blockchain technology to handle unstructured data. Where traditional supply chain fails in processing data efficiently, blockchain will thrive without error.

Increase transparency among B2B partners

Blockchains can record and store information in a supply chain. All the parties involved can access the data making it easier to exchange documents between business partners.

One of the drags on the global economy is the fact that companies cannot fully trust one another. Blockchain technology sets up a trustless environment improving relationships between enterprises and potentially growing the global economy. Fewer fraudulent transactions or non-payment will increase profit and serve as one more of the powerful cost reduction examples blockchain technology can offer the B2B firms. Blockchain ensures shared visibility like never before. 

Adjust to a changing market

Antiquated EDI technology doesn’t do well with big data supply chains. Due to changing market realities and consumer habits, B2B companies will have to adjust their processes. About half of B2B buyers are millennials and as such B2B companies expecting the manual process of placing fax orders, and handling paper contracts may be asking for too much from millennials. Current consumers want to place orders via B2B e-commerce portals and have their products delivered to them. Blockchain could replace EDI as the logistics technology of choice.

While blockchain seems like the most suitable technology to replace EDI, some remain skeptical. Many pundits predict that blockchain will augment EDI and not replace it. Blockchain can aid B2B companies in their process improvement strategies.

Cost reduction examples

As I mentioned above, blockchain tech can play a role in process improvement strategies for B2B companies. Eliminating intermediaries, supply chain automation, and an improved supply chain are also good cost reduction examples. But how can blockchain technology actually do this?

Reducing fees

One intermediary is the bank. Once there’s no bank involved, sellers will be able to save the percentage that would have gone to the banks involved in payments. According to Accenture, and McLagan, blockchain will save money for B2B partners by reducing or completely eliminating financial institutions fees for B2B transactions. B2B partners can also save the money that would have gone to lawyers. Cutting intermediaries also makes transactions fast, once the seller makes a payment, the buyer receives it immediately.

Automated supply chain

When data processing on supply chains becomes more accurate and immediate, one should expect that it will reduce expenses for B2B sellers. With greater automation, fewer employees are necessary. Human error can also drive up costs Why? Well, because for every human error in data analysis, the business owner has to correct it or pay for it. For instance, if a buyer places an order of 50 million copies of a product and during the logistics and product delivery there’s an error such that they send more than 50 million copies to the buyer, the seller will eventually pay for it.

But think of a scenario where products are labeled on the seller’s supply chain using blockchain technology, and the physical products must correspond to the labeled products on the supply chain then one can assume that it’ll be almost impossible to make an error.

Blockchain integration

The time has come for B2B companies to scale up and adopt blockchain technology. Many big brands such as Amazon, IBM, Alibaba, are pouring money into blockchain development. As of last year, 57 percent of B2B leaders noted that they need to integrate e-commerce with backend technology that will make B2B business processes seamless. While blockchain technology still appears too complex for B2B sellers, some blockchain experts have developed blockchain-as-a-Service for business owners, so that B2B executives can easily integrate blockchain API into their business.

Why wait when you can develop your B2B company on blockchain? As a startup, developing your B2B brand on blockchain from the beginning may factor into your process improvement strategy. Although there are not many B2B brands that are already using blockchain technology, it will be much worse to be miss out on a competitive advantage as more B2B companies.

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Blockchain Financial Services

4 blockchain real estate startups shaking up property investment

Real estate companies have traditionally benefited from keeping secrets. Try to invest in a property and you’ll likely have to wade through a bureaucratic nightmare and dodge widespread fraud. On the other hand financial advisors mostly agree that buying property is a good investment. So why would blockchain real estate startups show their cards?

Interestingly, several blockchain real estate startups have emerged over the last few years. Each intends to disrupt the way real estate industry work.  Secrecy is not profitable anymore, especially when middlemen become redundant. A blockchain network, after all, can reduce risk aversion through a trustless environment. In turn, this facilitates property transactions without the need for trusted third parties. Of course the expertize of real estate agent is still a great value. However a greater market demand for transparency in the global economy has spurred innovation in real estate tokenization.

Tokenizing assets makes many processes associated with property transactions happen faster and at a considerably lower cost. This, in turn, enables greater liquidity in the market and makes life of real estate investors way easier. Earlier this month, a $30 million New York property became the first asset to be tokenized using blockchain technology.

This article will shed some light on real estate tokenization and ways real estate startups are increasing returns for property investors.

How blockchains work

In order to unpack some aspects of property tokenization, it is essential to understand the basics of blockchain technology. At its core, blockchain is an ever-expanding decentralized public ledger. Individual blocks contain data, secured with cryptography that are impossible to change. Moreover, each block will have access to a cryptographic hash of the block prior to it. This includes a timestamp and transactional data. Having a publicly-accessible unchangeable ledger adds transparency to real estate industry.

Through smart contracts, blockchain real estate startups remove trust from the equation as well. In a market in which trust is of the great value, smart contracts are the perfect solution. Buyers and sellers can streamline the process of a property transaction.

Tokenization of real estate industry

Blockchains prevent any data manipulation once the information is on the distributed ledger. As a result, the technology records data permanently, efficiently, and transparently so that all parties involved can see the history of i.e. real estate transactions.

Moreover, blockchains prove very difficult to attack due to their decentralized, distributed nature. All these features encouraged the development of peer-to-peer transactions with cryptocurrency. Though since the advent of cryptocurrency, investors including future property owners have sought a way of tokenizing other assets. Real estate tokenization is one such example.

Blockchain startups tokenize an asset ensuring that sellers actually own the property and that the buyer has the funds to cover it through cryptographic smart contracts. A blockchain can seamlessly verify all this data instantly, reducing the time and the total cost of the transaction.

Tokenizing a property into cryptocurrency is the way of property management that allows increasing the security and viability of the purchase, and opens up a global market. To many, blockchain technology has a clear application in the notoriously opaque real estate market. Several blockchain real estate startups have filled this niche by driving innovative solutions.

New opportunities, new risks

In an interview with Tom Bill of Knight Frank, real estate expert, Abimanyu Dayal, said blockchain has the ability to revolutionize the property market due to its ability to increase liquidity rates.

“This could revolutionize the real estate market because it provides 100% liquidity 24/7,” says Mr. Dayal. “If you want to invest in London residential property today you are looking at £700,000-plus and are locked in for seven to nine years. Now you can enter and exit whenever you want and that is how people want to invest.”

However, the regulation of real estate tokenization is still something that is yet to fully settle. Mr. Dayal, however, believes that this will not affect property values, as the currency will always be based on domestic currency and not the token itself. If a dollar appreciates against a crypto, the liquidity of the cryptocurrency allows for an immediate adjustment that offers no arbitrage.

Conversely, Oxford professor and real estate expert Andres Baum believes such a liquid market is neither achievable nor desirable. His research document Proptech 3.0 is the leading word on technology and property.

“If real estate traded more like a stock or a bond, prices might rise due to increased liquidity, but equally they might fall because of greater volatility and risks. The global banking system has survived over the last decade because it has not been forced to mark property assets to market.”

This follows a similar theory which states that the banking system relies on marked property asset value. Investors who seek a different avenue than stocks and bonds may suffer from a lower yield due to a lack of diversification.

Blockchain real estate startups

Despite the risk associated with the property-blockchain collaboration, there have been a few startups run by open-minded real estate professionals who have attempted this marriage – with varying degrees of success. No doubt these companies are some of the pioneers in the industry and their experiences could aid anyone seeking to venture into real estate tokenization and new investment opportunities.

Propy

With an initial ICO that attracted over $15 million in investments, Propy is definitely a must-watch company in the blockchain property space. Founded in 2015, the company allows investors to purchase property through blockchain in a variety of locations, the most prominent being in the USA, Dubai, Europe, and Hong Kong. The company claims to aid cross-border property transactions.

As time develops, the amount of Propy users is expected to grow substantially, so early investors may see a reward for adopting the trend early.

Harbor

Launched in 2017, Harbor topped Propy’s initial capital raising endeavors. The blockchain real estate startup attracted over $38 million from its ICO. The token sale has funded Harbor to the point where they now hold a large share of the market in North America.
Meanwhile, the Harbor token is further backed by Ethereum ERC20, which allows for the resale of the currency as a security. Liquidity aspects are an obvious attraction with the Harbor model.

ShelterZoom

ShelterZoom is an easy-to-use platform that offers potential investors a way to infiltrate the blockchain property market from the comfort of a mobile platform. This includes other functionalities like widgets and a dashboard.
Additionally, the property aspects are straightforward and easily accessed. The company seeks to increase the number of sales over the Ethereum network. Transactions are founded by smart contracts, attracting users from over 22 countries.

StreetWire

Espeo Blockchain is proud to be involved in StreetWire’s mission to innovate the market. We’ve aided in blockchain consulting, writing a technical whitepaper, and designing the company’s landing page. In the future, we plan to support their backend operations. StreetWire is building a decentralized clearing house for real estate data and transactions. It will streamline processes around closing, lending and valuing property while returning value and control to data producers.

The project leverages blockchain technology to support the global adoption in an evolution of the technology in real estate.

Blockchain’s utility

While many industries are thinking of ways to apply a distributed ledger ( and whether it’s worth it), blockchain real estate startups have begun to use the technology. Cutting out expensive middlemen, streamlining financing, and removing trust from transactions are just some of the blockchain’s advantages in this traditionally conservative sector. Cross-border property investment may also increase as the decentralized technology reduces risk and verifies financing. Blockchain technology is poised to disrupt a market in dire need of an update.