Blockchain Applications and Real Estate

29. April 2021

 

"At Inacta, we are committed to blockchain technology because we believe that token economies will transform entire value chains, enable new business models and provide free access to the global economy, much like the World Wide Web did with information."

Why is it that it’s not just us but also entire industries, governments, and even private investors who believe in the enormous potential of blockchain applications and in particular in the tokenisation of real assets? 

 

No longer a niche subject

Blockchain technology has become the talk of the town - and not just because of the recent rise in the price of Bitcoin and Bitcoin investments of internationally renowned companies such as PayPal and Tesla. Newly developing blockchain business models are attracting great interest from a wide range of market participants. In the art world, prominent examples of such business models are increasingly attracting worldwide attention. This includes the recent sale for USD 69 million of a Non-Fungible Token (NFT) in the form of a digital image by the digital artist Beeple*. An NFT is a unique cryptographic token that cannot be replicated or destroyed and so differs from, for example, a Bitcoin, which is counted as a fungible token. A Bitcoin exists in identical form almost 21 million times, meaning it cannot be distinguished from its peers.

Currently no one can predict where this journey will take us.  However, various examples where blockchain technology has been used, including in the real estate sector, have shown that blockchain technology and its distributed ledger and automatic transactions are being used successfully independently of cryptocurrencies such as Bitcoin.  Transfer of ownership using smart contracts, but no intermediaries, has been going on for several years.  Blockchain technology has solved the problem of ‘double-spending’ of digitised assets in peer-to-peer transactions which take place in a decentralised way.  This opens up an array of opportunities for companies and investors to develop existing or new business areas using blockchain technology.  The scope of this development is comparable to the development of the World Wide Web. 

 

The essentials

The following fundamental blockchain properties have a significant impact on the application and success of its use:

  • Transfer of value
  • Forgery proof data
  • Traceability
  • Automation

With regard to blockchain applications in real estate, the focus is mainly on tokenisation.  This is primarily about more convenient financing for small investors, the documentation of on-chain ownership and the transfer of digital assets.  A security token offering enables the public sale of assets, rights or debts.  A security token can represent the sale value as well as the right or debt related to the linked object and therefore serves as a digital representation of ownership.

In this context tokenisation means a cryptographically secured, unambiguous and digital representation of the ownership and associated rights of any asset on a blockchain which is usually public.  In the asset token economy such as real estate, incentives and interactions are created as a result of the economic value of the object behind them. 

Whereas in the past SMEs had limited access to the capital market, for example, new forms of financing are now possible.  New markets and trading platforms are emerging for asset classes such as real estate and other assets that were previously considered non-bankable.

 

Reducing risks using our know-how and experience

However, the temptation to jump on the tokenisation trend bandwagon has its own risks.  Not every application is equally successful, appeals to investors‘ interests or complies with the issuing country’s regulatory requirements.  Therefore, based on our experience, the following should be considered when selecting a tokenisation project:

  1. Identifying the most suitable projects by assessing what value can be added using blockchain features
  2. Applying a tried and tested tokenisation process and involving suitable partners
  3. Ensuring regulatory and technical compliance.

 

Inacta provides support from start to finish

As in the 1990s with the emergence of the internet, blockchain technology offers enormous potential for innovative market players.  Even though this technology has been around for more than 12 years, its potential is only now being realised through its numerous uses. At Inacta we use our proven Token Lifecycle Model (TLM) and support our customers through a structured process – from evaluating how  blockchain will be used, through development and issuance and the lifecycle management of the respective token.  This process is supported by our specially developed products – KYCgate for identifying and onboarding customers and Tokengate for issuing and managing tokens.

Every day we evaluate new possibilities with our customers and develop customised solutions for them, using our know-how which we have gained from working with various industries.

Do you have any questions or a specific use of blockchain in mind?  We look forward to working together to develop your ideas!

 

 * https://www.christies.com/features/Monumental-collage-by-Beeple-is-first-purely-digital-artwork-NFT-to-come-to-auction-11510-7.aspx


Contact person:

Daniel

Daniel Rutishauser

Head DLT & Financial Services
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