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Blockchain Takes Manhattan - YouTube
Channel: Bloomberg Quicktake: Originals
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- [Narrator] Welcome to New York City.
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The crown jewel of the real estate market.
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Everybody wants a piece.
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And now, thanks to blockchain technology,
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that may very well be possible.
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This $36.5 million development
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is being sliced into digital shares,
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or tokenized, as it's called,
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so that investors around the world
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can own as much, or as
little, as they can afford.
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- We have the typical bank
financing on this project
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with a conventional bank, and
this loan matures in January.
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We've decided to take a right turn
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and tokenize the debt
here on the property.
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The construction is 95% complete,
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we are starting to get inspections
in the next week or so.
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- We have a bank deadline on us,
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where we have to sell a
certain amount of units
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or repay the entire
loan by a certain date.
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If construction's been delayed,
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if the market turns,
if competition pops up,
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and we're not going to be
able to hit that deadline,
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what do you do?
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So by tokenizing the debt,
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it gives everyone breathing room
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to sell at a normal pace with the market
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instead of against it.
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- [Narrator] The people
behind this offering
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reside across the East
River, in that other borough.
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Here, the blockchain start-up, Fluidity,
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has teamed up with
broker-dealer firm, Propellor,
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to generate tokens by
crafting smart contracts,
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and in so doing, they
could be changing the way
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we all do business in the future.
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- When we started to look
at the real estate industry,
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it's probably one of the
most inefficient industries
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that exist currently.
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You have a lot of
middlemen, a lot of lawyers,
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a lot of bankers and
just being able to create
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something that has real impact
on an industry like that,
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I think you're looking at
significant disruption.
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- [Narrator] But for a project determined
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to eliminate middlemen, there's
a lot of people involved.
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- Motivator.
- Coder.
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- I'm a lawyer.
- Facilitator.
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- Strategy.
- Project Manager.
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- Developer.
- Co-founder.
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- I'm just the broker.
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- I'm a fan.
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- [Narrator] An important
party that is absent
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in this equation is a bank.
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- There will not be a bank involved.
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- [Narrator] The process
goes something like this.
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These guys create tokens
on the blockchain.
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The tokens represent
the condo unit's debt,
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and can be traded as private securities.
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If token holders sell their shares,
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the purchaser can either
preserve the tokens
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on the blockchain, or cash them out,
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thereby dissolving
these tokens altogether.
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This, theoretically, would
produce more liquidity
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to a notoriously ill-liquid market.
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- It's a hard, asset-backed, secured loan.
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- We're taking private securities
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and we're putting a digital
wrapper around them,
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which makes it easier to
track and easier to transfer.
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- There's only four assets
you can own in the world.
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Stock, a bond, a currency or a commodity.
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And we think every single one of them's
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gonna get digitized.
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Tokenize the world.
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- [Narrator] And that's already happening.
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A UK company recently
tokenized this Andy Warhol.
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Now, 100 people own 31.5% of
this $5.6 million painting.
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And when it rises in value,
the tokens will as well.
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So, is the same thing happening with
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New York City real estate?
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- Literally, 25, 30 million people
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can own a piece of this at a dollar a pop.
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When has that ever been possible?
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- [Narrator] Technically,
it's still not possible.
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At least, yet, that is.
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Many hurdles remain before this becomes
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a democratizing force for the masses.
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Not least of which is the
fact that these tokens
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are only available to
accredited investors,
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keeping the barrier of entry high.
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Open only to the rich.
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But all of this is very new,
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and hasn't yet fully impacted the system.
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Blockchain innovations like this one,
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clearly has the potential
to disrupt the way we
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do business, and even the way we define
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the very things that we own.
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- You know, if there's another downturn,
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and banks say, oh, we have
a hard time lending now,
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okay, well, I don't need you,
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because I can tokenize
my loan that I wanna use
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to buy that condo there.
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And that's what I'm gonna do.
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So now we don't need banks anymore.
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That is what's crazy.
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