In the first offer of this type, US investors can now acquire a piece of South Carolina property in the form of token blockchain. Tokens represent the property in a luxury student residence called The Hub, pictured above, located near the University of South Carolina in the state capital.
The offer is significant because it is equivalent to the first REIT tokenised in the United States. This means that the owner, Convexity Properties, is providing a traditional real estate investment but uses the blockchain technology, a tamper-proof technology managed through different computers, to spread the piles.
Convexity Properties, which aims to raise $ 20 million by selling tokens, will allow accredited investors to buy for only $ 21,000. Buyers will receive tokens that are equivalent to securities, which will eventually be able to sell on cryptocurrency bags.
According to Josh Stein, who is the CEO of a company called Harbor that designs real estate tokens, the blockchain process is superior because it has less transaction costs – like lawyers' fees – than traditional property sales.
"Think of it as the transition from ordinary mail to e-mail in offices over the years 90. The content was the same, but the digital format made it faster, cheaper and easier to send," he said .
Stein added that the agreement with resident students is intended to constitute a model for many other future sales of real estate blockchain. He believes that the blockchain element will make the real estate a much more liquid market, allowing investors to buy parts of buildings as easily as they now purchase online stock.
Don Wilson, CEO of the parent company of Convexity Properties, DRW, said that the company chose the student residence as the first blockchain because it is an easy investment to understand. He says that The Hub tokens will be entitled to receive a 5% dividend.
While the real estate offer uses the same blockchain technology that supports cryptocurrencies like Bitcoin, tokens can not be bought and sold freely. This is because Harbor has added code levels to tokens to ensure that all transactions comply with the know-your-customer laws and other regulations of this type.
This process is a concept known as "programmable assets" and, in practice, means that the software will reject any sale that seeks to transfer the real estate token to a disqualified individual.
The student offer is not technically the first blockchain real estate sale in the country. At the start of this summer, the luxury St. Regis hotel in Aspen, Colorado, announced a plan to sell real estate tokens in cooperation with the Indiegogo crowdfunding site. Stein says that the residency offer is different, however, because it is the first institutional level offer available to any accredited investor.
Stein also predicts that these offers are just beginning and that soon all types of properties will be available in the form of token blockchain.
"It's an exciting start, but think about it when there's a lot, you could create a fund for a series of class A office buildings, or go long or shortly to different neighborhoods," he said.