“What if you could trade 1,000 tokens in the Chrysler building like you trade 1,000 shares of Apple?” – asks Rex, a new start-up with big ambitions that wants to disrupt the real estate market by using ethereum’s blockchain and smart contracts.
Founded by Stephen King, who has “participated in tens of millions in real estate transactions” according to their whitepaper, and Russell McLernon, a technology strategist, Rex lays out a three part plan to tokenize real property.
It starts with creating a distributed Multiple Listing Service (MLS) which they describe as a “database and software used by real estate brokers and real estate owners to share information about properties with other brokers, owners, buyers, sellers and tenants.”
Currently, they are centralized, with a handful of MLS proprietary providers charging fees for listing and other services. By using Ethereum’s blockchain, as well as other technologies such as IPFS, Rex hopes to create an open database of listings with estate agents and others paid for each listing or for inspection reports, surveys, and other verified data, with Rex tokens.
The tokens, in turn, can be used to advertise on the platform, create a profile, and for other services, with the second phase being the performance of a real estate transaction on ethereum’s blockchain.
The start-up will provide “software/GUI that will guide users through the smart contract creation process,” starting with simple lease contracts. Eventually, an actual property sale and ownership change is planned to occur through Ethereum’s blockchain.
The next step is to take the ownership and tokenize it, allowing you to buy or sell parts of it, like in current shared-ownership set-ups, but with much more speed, liquidity, and far less costs.
How exactly this will work in practice remains to be seen, but this isn’t the first project to try and tokenize real property. Maecenas, for example, plans to turn fine paintings into tokens you can buy and invest in for hedging or for speculative purposes.
Both projects are interesting because property ownership, in many ways, is just a ledger of previous property ownerships and how that’s changed, not much different than money itself.
That makes it a record keeping exercise – the strongest feature of blockchain technology as data can not be tampered with, preventing any fraud, and if the data is somehow changed it becomes obvious to any observer that there has been tampering.
As such, turning all these properties into dynamic digital data may be a significant upgrade of the current cumbersome paper based system which moves very slowly and is highly illiquid, contributing in part to soaring house prices due to their use for investment rather than occupancy.
With abstracted tokenized property data, ownership can respond much more quickly and at a far lower cost to changing market conditions, so perhaps better meeting supply and demand while at the same time potentially serving far better both occupants and speculative investors.
So it will be interesting to see how this project develops as if it is shown to work in achieving its objectives it may well be the case all others quickly copy the model so upgrading the very old current property ownership systems.