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Jongseung Kim, profile picture
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Asset tokenization Real Estate Reinvented

Asset tokenization allows converting ownership rights to real-world assets such as real estate into digital tokens on blockchain. This provides benefits like increased liquidity, fractional ownership, and global access for investors. Several startups are developing platforms for real estate asset tokenization using various models. For example, Brickblock allows investors to purchase tokenized shares of individual properties. Challenges include ensuring regulatory compliance, addressing legal issues around property rights, and developing trusted technology solutions. Overall, asset tokenization has potential to significantly transform traditional asset markets.

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Related topics:
Asset Tokenization•Insights on Real Estate•
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Asset Tokenization, Real Estate Reinvented Jongseung Kim (deframing@gmail.com) 2018. 11. 13
Why Asset Tokenization?
Blockchain Initiatives(Gartner) New Biz. Development EfficiencyPlay Digital Asset Market RecordKeeper Crypto-Wallet ID/Authentication BlockchainDisruptor (Startup) Logistics Crypto-Exchange SupplyChain P2PEnergyTrading RealEstateService P2PInsurance DigitalGoldService CarbonTradingSocialPlatform HealthRecord LandRegistry DigitalVoting BlockchainCorePlatform Legacy Transformation Short-Term Value Driven (Legally approved) ReduceCost (Legacy Integrated) ICO Driven ReduceFraud Mid-Term <Source:PayAttentiontoThese4TypesofBlockchainBusinessInitiatives(Gartner,2018)>
Signs of the new Blockchain World(PwC) The representation ofreal or virtual assets on a blockchain is spreading to raw materials, finished goods, membership rights, and more. Tokenized Everything Using blockchainwith theirERP systems, companiescan streamlineprocesses, facilitatedata sharing,and improve data integrity. ERP + Blockchain Initial coin offerings,in which a company sells a predefinednumberof digital tokensto the public, are a growing alternativeto classic debt/capitalfunding. ICOs are the Self-Funding Tech Accordingto the survey,financialservices are the currentand near-termfutureleader of blockchain,but also thereare potentialin energyand utilitiesand healthcare. New Leaders Emerge <Source:https://www.pwc.com/gx/en/issues/blockchain/blockchain-in-business.html>
What is Asset? <Source:https://en.wikipedia.org/wiki/Asset>  In financial accounting, an asset is an economic resource.  Anything tangible or intangible that can be owned or controlled to produce value and that is held by a company to produce positive economic value is an asset.  Assets represent value of ownership that can be converted into cash(although cash itself is also considered an asset). • CurrentAssets: Cash and cash equivalents, Inventory,Prepaid expenses • FixedAssets: land, buildings,machinery, furniture,tools, IT equipment Tangible Assets • Goodwill, copyrights,trademarks, patents and computerprograms,etc. • Financialassets, including suchitemsas accountsreceivable, bondsand stocks, etc. Intangible Assets
Asset Tokenization <Source:https://blog.softwaremill.com/asset-tokenization-on-blockchain-will-disrupt-the-asset-management-landscape-befbd71639b1> Asset tokenization allows to convert the rights to assets with economic value into a digital token. By tokenizing assets you can start trading them in a cryptocurrency fashion and managing their value exchange under contract written on blockchain.
Asset backed Tokens <Source:https://en.wikipedia.org/wiki/Property_rights_(economics)> Property (Asset) Rights Right to Earn Income from the Good Right to Enforce PropertyRights •Needto be RegisteredLegally •Profit isDivided Security Token Utility Token Right to Transfer the Good to Others Right to Use and Occupythe Good •TimesharewithoutOwnership •AccessisControlledby Contract -Tokensaredigital representationsofreal- worldassets,arethus backedbythem -Rightsaregratedtothe tokenholders.
Digitization vs. Tokenization <Source:https://bankex.com/static/whitepaper.214a1621.pdf> • Automatedsmart contractsfor deal execution • Commandsfor automatictransactions • Formulasfor calculationof the asset price • Automaticvalidationof the initial data Tokenization = +Digitization Financial Components
Tokenizing assets : 60+ blockchain startups <Source:http://researchly.leobosankic.com/2018/06/29/blockchain-companies-tokenizing-the-real-world> RealEstate Realisto, Bitproperty,DomusCoins,imbrex, Brickblock Utilities WePower Network, water.bankex Commodities OneGram, Orocrypt,DigixDAO,ChainTrade,Smartlands, GoldMint People TokenStars Collections:Artandtradingcards Maecenas,Ether Legends MediaandApps:Financingmovies, Instagramaccounts,Apps MovieCoin,AppToken,MEDIATOKEN Traditionalfinancialassets Blackmoon Crypto,Smartlands, Dharma, CoinLoan,BlockchainCapital
Benefits of Asset tokenization <Source:https://www.linkedin.com/pulse/asset-tokenization-using-blockchain-new-trend-2018-stan-pearson>  Liquidity of assets / Liquidity Premiums  New economic models around asset ownership, such as fractional ownership.  Diversification of risk arising out of asset ownership  Eliminating temporal/territorial barriers for asset owners for attracting investments  Reducing entry barriers for trading and investing  Newer models of raising capital, by allowing projects that are under development to issue shares in form of tokens to finance project development  Utilizing network effect for certain products to increase their popularity in the market, by providing direct financial incentive to fractional owners  Reducing administrative expenses
Real Estate Asset Tokenization Service Cases
Global Real Estate Universe in Comparison <Source:http://www.savills.com/impacts/economic-trends/8-things-you-need-to-know-about-the-value-of-global-real-estate.html>
Global Real Estate’s Annual Growth <Source:http://www.savills.com/blog/article/216300/residential-property/how-much-is-the-world-worth.aspx>
A First For Manhattan : Real Estate Tokenized With Blockchain <Source:https://www.forbes.com/sites/rachelwolfson/2018/10/03/a-first-for-manhattan-30m-real-estate-property-tokenized-with-blockchain>  The building, a completed 12 unit construction with 1700 sq ft units located on 436 & 442 E 13th St in the East Village, is the first major asset in Manhattan to be tokenized on Ethereum.  The property has recently been appraised at more than $30M. A luxuryManhattancondo development
44 Real Estate Cryptocurrencies <Source:https://cryptoslate.com/cryptos/real-estate>
Brickblock : How IT Works <Source:https://www.brickblock.io/real-estate.html>
Brickblock : How Simplifies Investing <Source:https://www.brickblock.io/real-estate.html>
Brickblock : Investment Opportunity <Source:https://platform.brickblock.io/invest/property-schoenberg-gmbh/0xcbf23082233ebf2b97a986b4d05669472d744e3c>
Crowdvilla : $24,900,000 in properties’ contributions <Source:https://crowdvilla.io>
Crowdvilla : Model Overview <Source:https://crowdvilla.io>
Crowdvilla : Token Point System <Source:https://crowdvilla.io>  Each Crowdvilla Token(CRV) denotes a share of time-value for the use of all properties in the Crowdvilla portfolio.  CRV holders earn Crowdpoint Tokens(CROWD) in perpetuity(i.e. on an ongoing basis for as long as the portfolio exists).  CROWDTokens are used to book stays in the properties.  The number of CROWDTokens generated is proportional to the number of CRV Tokens held and the length of the holding period.
REIDAO’s Model <Source:https://reidao.io/#benefits>  Every real estate that is registered will have its own Ethereum address where users can visit and retrieve information about the property, including its ownership details.  REIDAO’s unique property token will follow a certain standard that makes it usable for other services built on the Ethereum blockchain. Affordable, Diversification, Market Liquidity, Versatility, Global, Security
Primalbase : Mission & Business Model <Source:https://primalbase.com> Primalbase is transforming traditional office rental and creating a next-generation community-based ecosystem where it is possible to share, sell or rent out high-quality working spaces using Ethereum and Waves-based digital tokens.
Primalbase : Workspaces <Source:https://primalbase.com> Tokenpossession provides unlimited lifetimeaccessto all Primalbase workspaces. • 1 PBT— 1 workspacefor 1 person at any location. • 4 PBT— 1 private office for max.2 weeksdependingon its availability
Imbrex : Vision <Source:https://imbrex.io/#!> Imbrex is founded on the principle that the real estate industry should be in control of its proprietary data. Listing agents should have direct access to their leads and exposure on a global real estate network.
Imbrex : Data Escrow Contract <Source:https://www.linkedin.com/pulse/official-guide-real-estate-blockchain-stephen-king>
Asset Tokenization Platforms
Tokenestate : Tokenization as a Service for Real Estate Funds <Source:https://tokenestate.io/index.html>  Tokenestate provides an end-to-end solution for real estate fund managers to tokenize their fund, issue their own real estate tokens in form of cryptosecurities and access to a large pool of retail and institutional investors.  Tokenestate will take care of all legal aspects, required technical solutions and the fund raising process.
Tokenestate : Conceptual view of Tokenestate.io, TEIVs & RETOs <Source:https://tokenestate.io/Tokenestate_io_Whitepaper.pdf>
Bitproperty : Vision <Source:https://btptoken.io/en>  Bitproperty is a decentralised real estate platform powered by Ethereum smart contracts.  Bitproperty has two types of token: the BTP platform token and individual property asset tokens.  BTP tokens represent the inherent value of the platform and provide holders with income from transaction fees within the platform in proportion to the amount they own.
Bitproperty : How it works <Source:https://btptoken.io/en>
Bitproperty : Real Estate Purchasing Due Diligence <Source:https://realisto.io/files/papers/Whitepaper/REALISTO_Whitepaper_V1.2_EN.pdf>
Bitproperty : Offering Projects <Source:https://btptoken.io/en>
BANKEX : Operating system for capital markets <Source:https://bankex.com/en> • BANKEXis developing atokenizationecosystem,providing technology/servicesat everystage. • BANKEXbrings bank-as-a-serviceand blockchaintogetherto transformcapital markets.
BANKEX : Tokenization Process <Source:https://bankex.com/static/whitepaper.214a1621.pdf>
Swarm Fund : Mission and Swarm Platform Structure <Source:https://swarm.fund/swarm-basic>  Swarm Fund is the blockchain for private equity.  It’s a fully decentralized capital market place that democratizes investing by using the power of the blockchain to open up high-return, alternative investment classes to smaller investors through asset-backed funds using cryptocurrency tokens.
Swarm Fund : Basic Structure of the Swarm Token <Source:https://docs.swarm.fund/swarm-whitepaper-eng.pdf> SRC20 security tokens : • representownershipof part of an object or “asset”, • allow holdersto manage that asset through voting, • securea right to any revenuestreamsfrom the asset, and • are tradablein a regulatory compliant manner.
Issues and Beyond
Token Model in Real Estate Utility Token Security Token  A Utility token gives a user an access to a product or a service.  Utility token   is essentially the currency unit in the ecosystem.  Services can be bought and paid for with this, members can be rewarded.  Each Security token is unique to the asset itself.  A Security token represents actual ownership of an asset.  Security token generates income derived from the ‘asset’. ReplicatesDebt AlignedIncentives ReplicatesEquity
Problems and Challenges <Source:https://www.linkedin.com/pulse/asset-tokenization-using-blockchain-new-trend-2018-stan-pearson> Trustedissuers • Asset backedtokensneedto be based on the certaintythat using the tokensin any future point of the time, the participants can redeem their real-world assets. Regulatory Vacuum • Currentlythere is regulatoryvacuumover a big numberof questionsof how will this space shall be regulated. Legalenforceability ofpropertyrights • The fundamentalquestionis whetherowningtokensconfersownershipover the correspondingasset. Digitalidentityand KYC/AML • Digital ID marketplaceneedsto be integratedinto the tokenizationplatforms that meetthe stringentstandardsof biggestregulatorybodies, such as SEC. Assetvaluations/ rating • Thereis a needof trustedintermediariesand oraclesto provide such valuation and rating data on asset backedtokens.
Technology Issues  Almost all theAsset tokenization projects’technology is based on Ethereum Platform.  If all the access(use or occupation of the asset) controls are executed through smart contracts, transaction fee issues are remained.  For the near real-time transactions off-chain technologies are needed.  The function of access control has to be integrated to the IoT(Internetof Things) Technology.
“The technology is still new and many legal questions remain unanswered. But tokenization stands to bring massive opportunities for growth and diversification to the asset market. We will see major breakthroughs in this area soon!” <Source:https://www.linkedin.com/pulse/asset-tokenization-using-blockchain-new-trend-2018-stan-pearson>