Proponents of the technology, which enables digital currencies such as Bitcoin, say it can revolutionize real estate deals— but can it overcome its shady reputation?
In September, REcoin, a startup that billed itself as the “only cryptocurrency backed by real estate,” was busted for fraud by the U.S Securities and Exchange Commission.
The Las Vegas-based startup had planned to use blockchain technology — a growing list of public records that are encrypted and linked across a network of computers — to support its currency. It launched an initial coin offering (ICO), the equivalent of an initial public offering for digital currency, or tokens, and claimed to have raised millions. But as it turned out, REcoin was duping investors. It never had “any real operations,” had made no investments and misrepresented how much money was raised, according to the SEC.
REcoin is one of many startups looking to leverage blockchain within real estate. And incidents such as this illustrate some of the potential hazards of the nascent technology. While blockchain-based applications are touted as secure, the world of ICOs is a virtual Wild West. It’s a regulatory gray zone, and anyone can launch a token sale with nothing more than a white paper. It’s the same technology that enables the use of Bitcoin — which JPMorgan Chase CEO Jamie Dimon referred to in September as “a fraud.”
“It’s creating something out of nothing that to me is worth nothing,” the banking executive said. “It will end badly.”
That’s not to say Bitcoin’s underlying technology doesn’t have its benefits. In October, JPMorgan launched a blockchain-based payment processing network, which the bank says will allow for faster and more secure transfers of money. And some property executives, including developer Ben Shaoul of Magnum Real Estate Group, believe blockchain will be a game chan上海贵族宝贝交流区 ger for NYC real estate.
Magnum’s condominium development in Alphabet City will be the first New York site to accept Bitcoin payments. “People call us and say, ‘Hey, I’d like to be able to use my Bitcoin to buy an apartment,’” Shaoul said, noting that he felt it was a no-brainer to offer the option. “When the writing is on a wall, you need to adapt and pivot.”
Eric Hedvat, also of Magnum, added that Bitcoin is more efficient than other payment methods and reduces fees and transaction time. “When you send Bitcoin, it’s peer-to-peer, so you don’t have to go through the bank process, which could take three to four days,” he explained. “With the blockchain and the trusted network, you know in an instant if it was sent.”
But Bitcoin isn’t the only way real estate players make blockchain work for them. Proponents of the technology claim it will allow for smoother cross-border transfers, reduce transaction times from weeks to hours, end data monopolies like CoStar Group and Zillow, and herald a secure globalized real estate market.
“In real estate, blockchain can help a lot in both the title business and in pretty much every a[……]