This is how blockchain is conquering the real estate industry
Technology is like the beginning of the Internet: its potential is huge. And disruptive. It is already being used in the real estate industry and should continue to establish itself over the next few years.
The term blockchain should be familiar by now. Most associate it with cryptocurrencies like Bitcoin. That's right, where blockchain is just the technology and Bitcoin is a resulting application. Even if the technology may seem complicated, the Swiss blockchain expert Michael Trübestein is certain: “Blockchain technology is comparable to the beginning of the Internet. It won't go away anymore. At the moment it is just uncertain how it will develop. "
First you have to understand how a blockchain works: It consists of individual blocks – each of which stores data such as transactions. A blockchain works decentrally. In other words, anyone around the world can join a blockchain – virtually via a computer, of course. Every single computer stores all and exactly the same blocks that form a chain. Each block has its own «DNA». A new computer will only be admitted if it has been checked and verified by all other computers. Once programmed on a blockchain, it cannot be changed retrospectively by a single computer. For this, all computers would have to be involved – and that is exactly what makes the blockchain so secure. If a single computer tries to change the blockchain, the chain is immediately interrupted and the culprit is excluded.
"Hello World" in Baar is the first property in the world to be tokenized
The possibilities of blockchain technology are enormous for the real estate industry, as Michael Trübestein says. He is professor for real estate management at the Lucerne University of Applied Sciences, with a focus on real estate investment and real estate asset management. Numerous companies are currently researching possible areas of application. “Currently there are only a few applications, such as in the land register or in the investment / financing area. The world's first tokenization of a property, the “Hello World” property in Baar, ”says Trübestein, is an outstanding example. 20 percent of “Hello World” (CHF 3 million) of the property value was tokenized by the Zug-based company “Blockimmo” and sold to four investors.
The company “Crowdlitoken” has also specialized in real estate: the start-up founded in 2018 sees itself as a digital real estate bond. «Investors can participate in selected Swiss real estate from 100 francs / euro. After the investment, our users can put together their own real estate portfolio by placing their purchased bonds (Crowdlitokens “CRTs”) individually on the various Crowdlitoken properties, ”says Domenic Kurt, CEO of Crowdlitoken, explaining the concept. By participating in the real estate, the investors generate returns of up to 7 percent per year. You can either have this paid out monthly to your bank account or receive it in CRTs.
Access to the financial market is being liberalized
A bank does not have to be interposed for a digital bond, which is cheaper for the investor. Crowd
litoken already has 630 investors with a volume of 18 million CRTs. The real estate portfolio is constantly being expanded. The Swiss professional footballer Diego Benaglio is one of the prominent users of Crowdlitoken. Kurt defines what distinguishes Crowdlitoken from other companies that also rely on blockchain technology: “There is no comparable competitor who enables investors to invest such a low amount as an entry point for a stake in several properties. Investors can access the portal from their smartphone, where they can manage their entire investment. "
It is clear to both Trübestein and Kurt that blockchain has disruptive potential. The CEO of Crowdlitoken says: “Banks are becoming obsolete for investment products like ours. New sales channels are emerging and access to the financial market is being liberalized. " On the one hand, the digitization of the capital market is inherently completely disruptive, as this leads to an opening of the market. «There are no entry barriers; Entry sums are reduced. " On the other hand, the digitization of securities is inherently disruptive: “This means that values are no longer transferred via third parties. With blockchain-based securities, it is possible to send values without duplicating them, ”explains Kurt.
Trübestein adds: “Some applications such as crypto currencies have already influenced the world and the way market participants think. Nobody knows how the applications will develop in the future, but the advantages are already clearly visible. " The prerequisites are also in place in Switzerland: "We have target-oriented framework conditions and innovative companies here," says Trübestein. Cooperation between companies is important when implementing innovations. This is what happened, for example, with the “Hello World” property – the transaction results from a collaboration between Block-immo, Elea Labs and Swiss Crypto Tokens.
What is a token
Domenic Kurt, Crowdlitoken: A digital asset (token) based on the blockchain. It is a digital representation of a security. It contains property rights to the bond as well as the right to returns and represents a repayment obligation.
What is blockchain?
Michael Trübestein, Expert: A sequence (= chain) of information (= block). These are "time stamped" and are stored on several computers. This guarantees a high level of protection against forgery. There are also public and non-public systems. It can be used around the clock, seven days a week.
What can blockchain technology do better than a bank?
Domenic Kurt, Crowdlitoken: With blockchain-based securities it is possible to send values without duplicating them. It replaces the book of creditors and ensures that processes are designed and implemented in a leaner, more cost-effective and efficient manner.
