Bridge of cryptocurrency and real assets
Cryptocurrency backed by real assets
The bitcoin phenomena is both awe-inspiring as much as it is puzzling. There are no precedents valid to really model whats going on. Let’s put all that aside.
One thing that is certain is cryptocurrency will persist in some form from here on out. The question is what assets are best suited to be represented on a blockchain.
Thus far, the majority of crypto-related investments available (mostly through ICOs) basically boil down to angel/venture bets on technology startups. Many of these are over-priced. Given the traditional success rate of startups (crypto or not), these are incredibly risky, hard to value, bad for the general population investments.
Most of the venture bets in the space are placed on infrastructure platforms with the prevailing thought that these will support entirely new digital assets that haven’t even been imagined yet. Cryptokitties is perhaps the first mainstream breakout hit.
But there has to be a medium between digital cats and business ventures with a 99.9% failure rate. What about commercial real estate?
The majority of crypto-related investments available basically boil down to venture bets on technology startups. Many of these are over-priced.
Raising money through an ICO is almost overvalued, and not sustained by real assets. We have such network and manpower for enhancing our value in the real world with cryptocurrency. We are the bridge within the cyberspace and real world.
There are a number of businesses raising money through an ICO to put real estate on their platform coin. But once again this places the bet on the team to build a platform and create a multi-sided market rather than on building performance.
Commercial real estate investments are well-understood bets on location, tenants, and operators. Because most buildings have been in operation for years (decades) there is historical precedent on how best to evaluate. The returns aren’t necessarily astronomical, but they are consistent.
Commercial real estate is typically owned by an LLC with an owner/operator, perhaps some limited partners and a bank provided loan. Owners will often invest millions upfront to purchase the building and not see any liquidity unless they sell the property or refinance it.
To create a building backed cryptocurrency, owners would sell some of their equity (the difference between the current market value and the price they paid for the building) as building specific coins. So for example, 123 Market St would have a 123MarketStCoin. There is no coin platform in between the owner and investor that introduces unnecessary risk to owners and investors.
In return for their investment, investors would get some pre-determined dividend and perhaps a cut of future appreciation. The coin represents a legal contract between the coin issuer (building owner) and the coin purchaser(investor).
To create a building backed cryptocurrency, owners would sell some of their equity (the difference between the current market value and the price they paid for the building) as building specific coins. There is no coin platform in between the owner and investor that introduces unnecessary risk to owners and investors.
Such investments are SEC sanctioned and do exist today through private placement memorandums (PPMs). Typically investors are made aware through their investment brokers or financial planners. There are dozens of crowd-funding sites out there focusing on different commercial real estate segments. As is the case with assets in any investment class there is a wide range of performance.
So there exists a real asset, with historical performance that’s generating a dividend that’s perfectly legal today. But why use crypto? Simple.
To do this without would require the building owner to employ lawyers, brokers, accountants, marketers etc to coordinate all the paperwork, sell these assets and manage the ongoing investor relationships. With a cryptocurrency implementation you can take this highly complex transaction and apply templates to it cutting out all the middleman, making it faster, cheaper all while maintaining the trust of the offering.
The question is whether retail investors (beyond those that are already real estate investors) would be interested in such an offering.
We have such network and manpower for enhancing our value in the real world with cryptocurrency. We are the bridge within the cyberspace and real world.
Raising money through an ICO is almost overvalued, and not sustained by real assets.
We have such network and manpower for enhancing our value in the real world with cryptocurrency. We are the bridge within the cyberspace and real world.
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