Blockchain technology continues to penetrate the mainstream industries due to its amazing features such as integrity, immutability, robustness, and accessibility. The first application of blockchain was in the cryptocurrency space. We now see it on real estate, public records, insurance, banking, logistics and supply chain just to mention a few.
The idea of digital securities has been attracting heated discussions since the concept was fronted in early 2018. One of the biggest beneficiaries when it comes to the application of blockchain technology is the real estate sector that has been historically known for its “rigidity.” Digitalization of a real estate project comes with a myriad of advantages such as increasing transparency, accessibility, liquidity and also lowers the cost of transactions.
The big question is, “digitalization of real estate a passing cloud”? Some people believe that the entire concept is overhyped and not ready for mass adoption. It is prudent to take caution before you invest in any cause, and the UPRETS team understands why some people are worried. The Initial Coin Offering (ICO) hype of 2017 was a wake-up call for many people and some invested a lot of cash in dubious projects. Some countries like China even banned the launching of ICOs. However, China is working on various blockchain projects and also in the process of launching an official digital currency.
The issues raised by real estate digitalization critics include:
Liquidity Seems to be A Barrier
Some blockchain commentators are arguing that digitalized real estate increases market access but not liquidity, which is not valid.
“Liquidity is the speed with which one can trade digital security without affecting the market price.”
Companies such as UPRETS understand there needs to be an ecosystem for liquidity in digitalized real estate projects to become a reality. It is important to note that tokenizing a real estate project does not make it liquid instantly. There must be demands for the underlying asset before other factors come into play. UPRETS as a market leader ensures that liquidity for its real estate tokens come from the following sources.
UPRETS has a website and mobile APP that makes it easy for investors to buy and sell digital securties. The marketplace needs to be compliant with government rules on security trading. For instance, UPRETS takes into consideration the laws laid down by the SEC when creating a marketplace for various securities that it releases. An investor can thus buy and sell back the securities to the platform or other users within the platform.
Partnering with Other Players
Market makers are very crucial if liquidity in digitalized real estate is to become a reality. UPRETS is in partnership with DigiShares to create a European based digital security offering. Penetrating the European market becomes easy for UPRETS (New York-Based) as it takes advantage of DigiShares network in investor relations, legal matters, and marketing. Joining global bodies such as the International Cooperative Organisation for Security Token Offerings (STOCOOP) also increases the exposure of information on digital securities to outside the world. As a member of STOCOOP, UPRETS takes part in creating a global platform that is compliant and makes it easy for others to access information on digital securities.
Digital Securities Exchanges
The idea of trading tokenized real estate assets on a secondary market is interesting. Cryptocurrency exchanges have been reported to manipulate data on their sites, and investors end up making poor decisions. Digital security firms are thus choosing to work with regulated exchange platforms. Such an approach ensures that the exchange sells both legitimacy and liquidity which are essential ingredients for digital securities. It is the role of the security to do background checks to make sure that it lists digital securities that are valuable and in demand.
There Are Uncertainties When It Comes to Regulations
“What if I invest in digital securities only for them to become void or valueless due to changes in regulations”? That question is very common as no one wants to lose money, especially after the ICO craze. There is a big difference between the approach that ICOs and DSOs take when it comes to regulation. ICOs are focusing on avoiding government regulations while DSOs want to make it easier to offer digital securities that are complaint.
Countries like the US are steps ahead as they make it easy for digital securities firms to issue digital securties that are complaint through the Securities and Exchange Commission. Creating the right framework requires collaboration from different players and UPRETS is ready for such collaborations. Real estate digitalization firms also analyze the target market to ensure that they provide compliant securities. For instance, UPRETS will have to analyze the securities laws in the European Union if its target customers are based in the EU. The company can thus have different terms for the same portfolio for different people in different countries/ regions.
Blockchain May Expose Confidential Information
Displaying a lot of personal information on a public blockchain does not sit well with most potential investors. Digitalization platforms thus need to have permissioned blockchains that will display smart contracts details to only the parties involved.
UPRETS uses Xbolt for smart contracts while bitcoin is the communication protocol while EWthereum protocol is used to distribute digital securties. A user on the X-BOLT protocol can initiate a transaction and get assurance that a 3rd party block explorer will not monitor the transaction. The approach ensures that there is a separation between data that should be on the public chain and what should remain private.
The digitalization of real estate assets is changing the entire narrative of the real estate market. There are several successful digitalized real estate case studies, which are enough proof that the idea is practical. Solving some of the issues that face real estate digitalization requires collaboration from various players.
UPRETS is a platform focused on simplifying investment in real estate.
We are dedicated to providing a convenient, compliant and advanced real estate digital securitization platform for property developers, asset owners and investors globally.
By utilizing UPRETS platform, real estate developers and assets owners can create digital securities for their properties, allowing investors to benefit from the rental dividends and capital appreciation of the properties in major global cities.
Backed by a publicly listed real estate conglomerate (NYSE:XIN) and our award-winning, patented blockchain technology, Xbolt, we bring a network, experience and luxury assets to the platform.
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