Blog Post No.107
Blockchain Applications Beyond Cryptocurrency – Real Estate and Asset Management
Yael TAMAR has spent almost two decades in the financial markets. She is also a regional co-chair OF A COMPANY FOR A leading international network for exchanging knowledge between the real estate industry.
To connect with this expert, email us at firstname.lastname@example.org and we will put you in contact with Yael.
Today we are in conversation with Yael. She talks us through how Bitcoin was created, what NFTs are, what Web3 is, why a blockchain mechanism is important, and how it can be helpful to store and transfer all kinds of assets, not only cryptocurrencies. Blockchain and real estate applications include title registries and placing real estate cap table or ownership table on the blockchain.
Yael has spent almost two decades in the financial markets. She is also a regional co-chair for a leading international network for exchanging knowledge between the real estate industry.
London property homes super prime, where you can find informative educational and entertaining content, covering all aspects of property.
Farnaz Fazaipour 0:11
Hello, and welcome to London property home of super prime. I’m your host Farnaz Fazaipour. And today we’re in conversation with Yael Tamar, who’s the CEO and co founder of solid block, based out of Tel Aviv joining us to tell us all about blockchain. Welcome to the show.
Yael Tamar 0:28
Hi, Farnaz. Thank you. Thanks for having me. How are you?
Farnaz Fazaipour 0:31
All good. Thank you. So yeah, we’re going to try and go into this with baby steps, because a lot of us have a lot to learn from you. So I suppose the first thing we should maybe discuss is blockchain. And its relationship to crypto because I’m sure a lot of people bundle these things together when they don’t really know. So let’s start from from giving us really the the Idiot’s Guide to blockchain.
Yael Tamar 1:00
Okay, fantastic. So, first of all, Blockchain came into the realm and about 2010 or 2011, when this word blockchain hasn’t even been used, and what people heard about was Bitcoin, essentially, a Bitcoin was the first application of the blockchain technology. So let’s start with what what Bitcoin is. And then basically, in general, what crypto is. So let’s say that I want to send you finance as I don’t know, $100 in fees for your services, and I’m here in Tel Aviv, and you’re there in London. So I have several options, I can send you a bank transfer wire, I can send you money using PayPal, or one of the apps write Venmo, or, or stuff like that. So when I send you a wire, my bank is governing, you know, my assets is managing the assets. For me, it will look at my balance, sometimes the bank will say you have no balance, you can send $100. And sometime, and if I do have a balance, then they will reduce my balance by $100. And they will actually send a wire to your bank, and possibly they don’t have a direct connection to your bank. So there might be a few banks in between. So each of these banks is going to push the transaction forward, and your bank will add a balance of 100, mine will subtract, and there will be a transaction fee in between for all of this service. And a lot of times what I heard is the correspondent banks actually use individuals that push this transaction forward, right, that some of these transactions are not even automated. And that’s why it takes a week, sometimes from money to reach there. So that’s basically how transactions work in the real world with the so called swift method. with PayPal, it’s easier because PayPal everybody has an account with and there’s just one party, it will reduce my balance, it will up your balance. Now, again, we’re dealing with central central parties that, you know, manage all of all of this process. Now Bitcoin was so revolutionary the first time it came into the market, because it was the first ever currency that was fully digital and did not have this central authority to check your balance and you know, to make the transaction from one place to the other from one account to the other. And because, you know, it’s actually fairly complicated if you don’t have a central authority, how you know, that the same digital currency can’t be used twice or three times or four times, right? Between in transfers between individuals. So the way that Bitcoin worked, and it was described in the white paper written by a pseudonym, Satoshi Nakamoto, they basically they described this process of the transactions, which also came with a network the network of computers that collectively had a power through autom fully automated mechanism to check the balance making sure the 111 wallet so they counted, they called them wallets, that one wallet that wants to send money has the balance that the other wallets in fact exists, that it’s not the money is just not going to disappear, right both wallets exist, one has the balance, they transfer the take out the balance from one add the balance to the other, that was the job of a network as a whole through a mechanism that gives power to at least 50% of the of the system to decide on to make decisions on on these matters as opposed to as opposed to one you know bank or PayPal and so on. So that was a revolutionary concept. In fact, the system that allows Bitcoin to exist because Bitcoin is the actual asset and the currency that was transferred in between the wallets with in according to this white paper to the system is actually called the blockchain. So the blockchain is basically a network of processes that has an algorithm to approve In various transactions, right? And then so in 2010, the world changed effectively, because now we have a tool that enables decentralised transactions. And that’s very, very, very important. In some ways, it was very worrying to the banks. And that’s what the banks were against cryptocurrencies initially. And so what did we find in the later years that this blockchain mechanism can actually be helpful to store and transfer all kinds of assets, not only cryptocurrencies, you can transfer real estate, you can transfer rights to a song, you can transfer a picture of shimp and Z, you can do a lot of things on the blockchain, because it’s a much better way to store and transfer assets information. And
Farnaz Fazaipour 5:49
so, you touched on the transferring chimpanzees, and we won’t go into deep detail about this. But, you know, again, as a novice, is that what NF T’s are?
Yael Tamar 5:59
Yes. So NF G’s were in the beginning, very popular tool for transferring ownership of digital art. That was the, you know, kind of the first, first use case that everybody could understand right arts and collectibles. But with time, as any industry that evolves, it has actually evolved in more transfer of utility and rates of actual real world assets. So solid black has recently come out with a platform called and an NFT. stays. And we worked with the New York hotel to issue NF TS for stays in the hotel, for example. And we have several projects, that issue and FTEs for membership clubs. Right. And I have read an article today that basically says that almost every entrance and access in the future is going to be done with NF T’s because just much better way to to grant people access to anything information, you know, to have a subscription for the New York Times or, you know, whatever you can whatever you can think of will be done with NFS.
Farnaz Fazaipour 7:13
Wow. So the blockchain is is is the sort of hard hardware and then the crypto is the software that you use to shift through on this hardware. Would that be an easy analysis? Or am I simplifying it?
Yael Tamar 7:28
Yeah, so the blockchain is both hardware and software. And in fact, you can contribute to the hardware anybody can seem to mine Bitcoin in their home, they can place a computer to become a part of the system and earn money this way, Bitcoin or other currencies. The cryptocurrencies themselves, in fact, you right, they are software, but it wouldn’t simplify it in a way worse hardware and software, you know, mean different things. But cryptocurrency is a smart contract, essentially. And you know, what money is also the smart contract? Well, money is a contract, but not necessarily smart money in general is an IOU. If you have a pound, and you’re supposed to and in the tour, you’re supposed to be able to take this bound to the bank, right? And get a new one. Right? So that’s an IOU of the government, that the actually they’re giving you a value of one pound, right? And cryptocurrency is the same, it’s a smart contract. And a smart contract basically states that anybody who accepts Bitcoin, by the way, in El Salvador, for example, it’s an official tender. So if you have one Bitcoin, and you show up or if you have whatever amount of bitcoin is sharp and sharp, they are supposed to sell your product and accept Bitcoin, right? So it’s the same, it’s the same, exactly the same concept, except there is no sovereign entity issuing this currency.
Farnaz Fazaipour 8:50
So it’s, it’s going to be the global currencies is what the future would look like.
Yael Tamar 8:56
Yes and no, right. So yes, because in general, there are several currencies that are very powerful, like Bitcoin and Ethereum also, but they’re also government currencies coming out there called CBDCs central bank, a digital currency, and where the government will be issuing a digital dollar a digital shackle or digital challenge to kind of streamline the operation that you don’t have to print money anymore. You don’t have to touch money anymore. It’s a double edged sword, because it could also you know, some people argue that it can be used by the governments to control people’s spending. I’d say if you want to buy something they don’t approve or approve off. They could switch it off switch off the access. So but but yeah, they’re actually governments are using Blockchain even now, for many things, even let’s say title transfers for real estate. Some governments are using Blockchain many, many governments are using Blockchain for financial reasons. And you know, records keeping records and banks are using Blockchain as an alternative to swift for interbank transactions. So it’s actually so it’s very widely used almost as wide as the internet now for the b2b, for the for the business world.
Farnaz Fazaipour 10:10
Wow. Okay, so can you give us some scenarios of how blockchain is being used in real estate.
Yael Tamar 10:17
So there are many applications actually, of blockchain and real estate that have been explored. The easiest one, as I mentioned, is a title registry. And that you don’t have you know, anywhere where you keep a lot of information and a lot of data and transactions are happening and you want to streamline the transactions. Blockchain could be extremely helpful. So in countries like Georgia, they’re using Blockchain registry title registry, to facilitate very fast and quick transactions, basically, of the title wallet to wallet, it’s actually reminded and reminiscent of NF T’s right, early NFT, a pretty much the same, you get a token that represents your asset and it goes in between, you know, individuals wallets, pretty much the same, but on the government level, and it’s for this transaction to happen. There, of course, needs to be many rules, right? You need to verify identity, you need to verify ownership. So they pre verify ownership for every single asset, it took them several years. And now because they pre verified, they can do these transactions so quickly, right? So that’s one of one application Another application is placing real estate cap table or ownership table on the blockchain. So there could be one owner per acid, there could be many, right? Sometimes you have syndications and where you have many investors coming in and holding a piece of the asset this happens in commercial assets. Me Right. So why why should we put either all of the cap table or some of the cap table on the blockchain? Well, very simple. The as I mentioned, in 2010, when Bitcoin came about the world changed, and the world of blockchain technology is evolving much, much faster than almost any other FinTech in tech as a financial technology, and almost any other tech, right. So it’s evolving much faster than than almost any technology. So now, in the financial in the world of finance, there is basically such evolving field as web three or blockchain finance, sometimes called also a decentralised finance, where you can borrow and lend against crypto assets against digital assets, where you can combine these digital assets in indices, and structured products, and also, you know, gain a lot of liquidity that way. So they’re all of these economic and financial operations available. And that’s, that’s what solid block specialises and we specialise in, in moving cap tables of assets into the blockchain and almost building identity of an asset on the blockchain, so that the owners of fractions of those properties can have access to, to loans have access to different products associated different financial products, investment opportunities, swaps, trading, all kinds of things, just for the regular assets that they have brick and mortar, brick and mortar. So that’s another application. When we talk about assets, there’s also other aspects like asset management, for example, there is a company called Real block that’s using Blockchain very successfully for asset management. And they claim that there are huge savings on costs associated with asset management, I think they mainly talk about commercial real estate. So you know, somewhere 30 to 70% of the costs. And so they recently partnered with a huge real estate asset management company called LaSalle. Right? So they’re putting 70 billion worth of real estate on these blockchain rails, right. So that’s already something really interesting, right. And then the final use case that I want to mention is marketing or online presence, so an asset, right, so and that’s where we can touch up on the evolution of the Internet. So from web three, from web zero to where we are right now, which is web three, the new generation of the web. So the initial web one was what was in early 2000s, or late 90s, where websites were kind of all the rage, and everybody wanted to have a website, you know, so every company, and then in that what one theory is, do you have Greg’s less than America? I’m not sure what the hell you guys had in the UK, where you could list your property, and then list your phone number people would call you. It already increased exposure, right? Because as opposed to newspapers and radio, right, so you could actually list your individual property. And then with web two, you had ads, you have basically apps, right? In 2010. You had apps and you have Facebook and you had Twitter and you could actually have a Facebook account for your real To the agency and so on right to Facebook page. So that was the evolution into the apps. Now in the web three worlds. We’re moving into a more 3d and experiential environment. A lot of it is on the metaverse. So you can actually place your assets like a digital twin in the in the 3d environment, or a Metaverse environment, which is like this interactive environment where by the way, all most of the social media is going right Facebook was renamed meta for that reason, because we’re now going to be consuming web experiences in a totally different way. Right? more lifelike, more interactive, also more ownership driven, right, you can actually buy, like even a piece of a Facebook with permanent display, for example. So those of I think those are kind of four use cases that I would that I would apply.
Farnaz Fazaipour 15:54
So really the blockchain of the future, we will all be digitally twinned, and so will all our assets. And then we can just, you know, trade in that other world together and quickly, without all the overheads and without all the delays.
Yael Tamar 16:08
That’s exactly the idea. Now, I know that there are some concerns that frictionless real estate, could lose some of the real estate power, which is in the pricing and the stability, and so on. And I generally, personally did some research and kind of modelling into where the stability of real estate is coming from. And in general, the stability, in my opinion of real estate is coming from population growth, and the utility of real estate, because no matter what kind of digital world we’re going to live in, and treat in, at the end of the day, all of us have to sleep somewhere, and work somewhere and exist somewhere, right? The offices is where companies live, at the end of the day, at least part of the time, you know, shopping malls and places where people interact, at least today, right, they could change in the future. But as you saw with COVID, where we all got zoom, and, and, and Amazon fatigue, and people actually started, you know, coming in droves to shopping. So it’s not only placed the interactivity in the real world, this was still driving the real estate. So I think that’s, that’s always going to be here to stay.
Farnaz Fazaipour 17:29
Yeah, I mean, I think it’s just going to bring efficiency, isn’t it, and it’s going to cost a lot less than bring a lot more certainty. I mean, we just recently did the research into how many transactions actually fall through from when the offer is accepted to when the contracts actually exchange. And it’s something like, you know, in excess of 30 35% actually fall through. And usually, you know, that delays caused by the paperwork and by, you know, things that if that had happened faster, then people sentiments and people’s, you know, kind of momentum wouldn’t get lost and deals wouldn’t pull through so that I can really see you know, where that’s going, but you’re obviously very ahead of your game. And
Yael Tamar 18:12
yeah, so this use case that you mentioned, is also an important use case. In fact, one of my friends, Natalia is Co Op, they’re Miami based companies. So they actually do all of the transactions in the absence of title registry on the blockchain, they do actually does individual home purchase transactions via NF T’s that go, you know, through in seconds, and there are no delays that are no two steps, you know, everything is done on the blockchain. So that’s definitely the future of, you know, single family home transactions.
Farnaz Fazaipour 18:44
And can you tell us a little bit about the NF T’s for Airbnb model that you were touching on?
Yael Tamar 18:51
Yeah. So in general, when you order you know, any, any sort of stay online on a hotel or an hotel or in an apartment, in the home and so on, so forth? You know, I think I think that the NF T’s are definitely streamlined will streamline the whole process of you kind of searching for assets and finding something that suitable to you and so on. Right? So I personally spent so much time in searching through different Airbnb listings and so on, and I would also prefer to have to be a part of some sort of a membership club and a specific asset, right, so I’m able to go and come and pleases and go, so that’s what NF T’s provide NF T’s basically provide brands or or hospitality owners with a way to accommodate their, you know, their user base, right. So they can sell NF T’s to the users to be able to book you know, with either with a certain discount or just all inclusive back packages and differentiate themselves from you know any other hospitality user. And also enable very easy redemption of different perks. So you can add, you know, hospitality, but you can also add the spa and you can add restaurants and you can do whatever you want very easily with NF Ts. And also you can verify on the blockchain on verify whether these benefits have been used or not, right. So the individual can actually resell, they can combine NFC to stay, let’s say in a London property, they think they might go to London this year, but maybe they won’t go to London at the end of the day. So they’ll just resell the the rain to stay on the property to someone else.
Farnaz Fazaipour 20:43
So then, and then that that way, the the actual property will, again from identity purposes, will be verified that when they passed on from one person to the other, then know exactly who’s coming in.
Yael Tamar 20:56
Yes, exactly. So they Well, I don’t know if they will exactly know who’s coming in until the person actually registers. So they might own the NFT. But they haven’t, when they redeem the NFT to stay, they would go through the same the usual websites, either Airbnb or guests do whatever they’re using, and then get 100% coupon. So they’ll know who this person is when they actually register for a specific date. But the NFT is more of a general kind of ticket to use. Right? For for ordering. So they will know but they they won’t know necessarily who bought the NFT. And who holds the NFT. Redeemed
Farnaz Fazaipour 21:38
Yeah, until they’re redeemed. And the benefit of this to the to the consumer is basically the the the ease of use, and the efficiencies Is there any cost savings.
Yael Tamar 21:49
So there could be there could be cost savings. And in general, I think it will encourage people to buy in advance, especially now, I would totally do this with airlines, if they offered me this right now just to pre buy, you know, like, pre buy tickets, and then use it later on. Because you know, as you know, airline tickets go up faster. And this can can help companies and businesses to also kind of gauge the demand. And I think in general, to tell you the truth, like a lot of times with these technologies, you don’t know where it’s gonna go until the industry pushes it in a certain direction. So we decided to release the NFT space here and then let the users decide what are the main benefits and the hotels themselves and their marketing experts can design a product that we can facilitate from the technical point of view, but you know, they should know what is the best product for them?
Farnaz Fazaipour 22:45
Yeah, and for businesses, I guess it brings some form of security, because if you’re forward selling things, then you know what’s coming in the future.
Yael Tamar 22:51
Exactly. And they can reward their most active users, right and their most loyal customers. Yeah,
Farnaz Fazaipour 22:59
well, I’m very fascinated to see how all of this will develop. But I can, I can certainly see that, you know, as I say, you are ahead of your game. But as as more and more people take on I guess it’s going to be have to come from the suppliers taking this on and then educating the consumers, then, you know, it becomes more of a commonplace, so you don’t think that there’s going to be a fragmentation. So the same way that you’ve got the different Bitcoin brands, do they all in the end become one platform one unit? Yeah,
Yael Tamar 23:34
so in terms of Bitcoin and other currency, so you know, there are some very strong currencies and then there are alternative currencies as well, that fuel all kinds of ecosystems, usually behind a currency. You know, either it’s just very, very much cryptocurrency for the purpose of exchange, Bitcoin is one of the examples. A lot of the other currencies power, so sort of an echo system, and, but in terms of NF, T’s, every hotel, every property, everything will be a separate NFT. Or you could have a package of NF T’s selling just kind of you have sometimes a package of I don’t know gifts coming to your house every month. So I could send you a package of NF T’s like I can send you access to a spa, I can send you a I have an all $100 in a shop, I can send you to a manicure appointment, and so on, right? And then if you don’t like something, you can just sell it right to someone else. So it gives you more control over the services that you order.
Farnaz Fazaipour 24:37
Okay, so really, from a real estate perspective, it has to it’s the titles that should be digitalize for it to really get going and to get people on board. So one to watch is Georgia basically.
Yael Tamar 24:53
Yeah, so the title registry would definitely help everybody but blockchain entrepreneurs are so savvy They figure ways around the government that kind of restrictions and, and you know, not in terms of breaking the law, God forbid, but also in terms of kind of can’t wait for governments to implement things. So you can still benefit from from home sales, and through NF Ts, right. So there are companies I mentioned those prophy that enable, you know, person to person transfers by and in terms of individual homebuyers and home owners today, that, let’s say offer their home for short term rentals, they can use NF T’s to sell to sell the stays, they can also use NF T’s to sell the home, right. So this would probably be the best model for, let’s say, a developer that has either a multifamily or has a bunch of single family homes to sell. And they can basically even sell them or do a long term lease via an NFT. Or they can still keep managing the asset, especially for somebody who comes into town just a few weeks out of the year. And so they can even rent out the property for them the rest of the year. And the the NFT holder can get the majority of the rent, right minus the management fees. So this is much much better done with NF T’s than traditional contracts, right? So because the person who’s been who’s coming doesn’t know the local laws, doesn’t know how to buy doesn’t know how to register, you know, it’s complicated. They couldn’t just buy this NFT from a company that’s managing the property for them, will let them know when they’re coming to spend the rest of the time collect the rental income.
Farnaz Fazaipour 26:39
That’s another really good point. So you’re actually standardising all the different jurisdictions and all the different regulations because all you need to learn is how to deal with it via blockchain and NFT. Well, that’s really, really interesting stuff. I have got actually, two people in mind, who are involved with our platform and AI experts directory who are at the cutting edge one is selling a little bit at a time into investments. So it’s kind of group investments that they might be very interesting for them. And the other one is a residence commit a residence Club, which is launching imminently. And I’m actually meeting the founder later on this afternoon. So it’s all very exciting stuff. And thank you so much for giving us a insight into what you’re doing. And we will certainly be keeping an eye on your developments and look forward to talking to you again on our show.
Yael Tamar 27:30
All right, fantastic. Thank you Farnaz. Have a great day.
Farnaz Fazaipour 27:34
Thank you. Thank you very much. Thank you for listening. That was definitely very educational chat with y’all in Tel Aviv to listen to other experts that we’ve interviewed on our show. You can follow us on all the normal platforms to listen to our master classes that come out every Friday. Alternatively, head over to London property.co.uk Look at our experts directory and find the professionals that you need for your transactions.
Thanks for listening to the London property podcast, head over to London property.co.uk And subscribe to our newsletter to receive latest updates.
“ There are many applications of blockchain and real estate that have been explored.
The easiest one is a title registry.
Anywhere where you keep a lot of information, and a lot of data and transactions are happening, and you want to streamline the transactions – blockchain could be extremely helpful. ”
As always, we would love to hear your thoughts. Please feel free to contact us if you have any questions, or you would like to work with Yael. Email us at email@example.com.