Everyone.
Marissa round here, Ken Macrocosm, legal adviser.
And today we're going to talk about the tokenization of real estate
and why it's so important for you to get your mind
wrapped around this concept because it's going to change the future of real estate.
Now, I'm not talking about crypto.
A lot of people know Bitcoin, ether and all this stuff, and bitcoin is a small
sliver of the underlying technology, which is blockchain.
That's really the game changer.
I'm going to talk about blockchain
towards the end of the video so you guys can get your minds around it.
But what I'm talking about is the digital representation
of the underlying asset, or sometimes it's a digital
representation of an underlying perc.
So let's take real estate, for example.
So right now there's a piece of real estate
that maybe it's your single family home, your personal residence,
and you own 100% of that property.
All we're talking about is, in addition to having your ownership certificate
or your ownership in the form of the deed, you're going to have this represented
in a token, an asset token, right?
One token.
If there is multiple of you, let's say there's three owners of that property,
you can divide that up into three tokens.
So in addition to having proof of ownership in the form of a deed,
you're also going to have a digital representation of that deed
that's going to live in blockchain, which is the critical piece.
Same thing with LLC.
This is kind of the world that I live in, which is syndications, right?
So a syndicator buys a piece of property, puts it into an LLC.
The LLC is owned by multiple individuals.
Those people have a certificate, an LLC membership certificate,
or if you own a stock, you can have a stock certificate.
All we're talking about it is that digital representation a token of that LLC unit.
So for example, if you're in a syndication and you own, let's
say 1% of the company, 1% is a limited partner.
What we're talking about is simply taking that
and let's say we take the entire LLC and turn it into 100 tokens.
Well, now you're going to own one token or more likely it's going to be
a thousand tokens or you're going to own ten
so that you have the ability, which is important, to be able
to sell one, two or three of your tokens in the future.
But that's the digital representation of an LLC unit.
Now these two, as you can see, are backed by an actual asset.
That's why we call these the acid tokens, or in the case of a syndication,
it's actually called a security token. And we'll talk about that in a second.
But there's some other types of tokens that I wanted you guys to be aware of
that are not actually asset based.
They're actually what we call utility tokens.
And this is a great example is the American Airlines example.
Right.
Those of you that are frequent fliers,
an American or United or whatever, you know that you have miles, right?
So I have about 500,000 miles.
And so those are going to be turned into tokens.
Right.
Instead of having 500,000 miles in the very, very near future,
I'm going to have 500,000 tokens that are going to live on blockchain.
And I'm going to be able to trade those or have whatever benefits, whatever perks
I get from those particular tokens, all those miles,
unlike the actual LLC or property, I don't actually own American Airlines.
Right, because the owners of American Airlines,
they're the shareholders, they'll have their tokens which show the ownership.
But I'm over here with my miles.
And so obviously
if I have 500,000 tokens for my miles, I don't actually own American Airlines.
I don't get to participate in the profit or loss of the airlines.
I just have this utility, this perk that belongs to American Airlines.
That's the kind of token I'm going to have.
What's really fascinating about this is that pretty much
everything in your life is going to be tokenized moving forward.
So we always hear the other term called NFT, the NONFUNGIBLE tokens.
So we have an asset backed token, security token, utility token.
Then there's these Nfts which are Non-Fungible tokens,
meaning that sort of unique and it's a very specific type of thing.
Look, your marriage certificate is going to be tokenized, right?
If you need to prove whether you're married, you're going to have a token.
Are you gonna be able to prove that you have a marriage certificate,
your vehicle registration?
That's going to be a token. Your airline ticket.
That's going to be a token.
Your concert ticket. That's going to be a token.
Think of it as the QR code right now.
Everybody got used to QR codes.
You know, in the old days you'd have a paper,
you'd have a paper ticket, and then it went to sort of a a web based ticket.
Now it's a QR code based ticket, right?
Nobody shows up to the airport with an actual ticket.
Very shortly you're going to have an NFT to show proof
that you have the airline ticket for the concert tickets.
So Nfts are pretty cool when it comes to real estate.
Think about the possibilities on the real estate side
because you can obviously have proof of ownership.
Like we said earlier, you've got that in the deed
that's in the county recorder's office
and you've got to go through a lot of steps to get that proof.
That'll be a token the boundaries of your property.
You know, right now you have a surveyor that goes out and says, Well, here's
the property lines also that's going to be tokenized.
That's going to be on blockchain.
So if you're a surveyor out, there are no a surveyor out there.
That's probably one of the jobs
that is going to get eliminated, because imagine that once you do that once
and that survey is recorded on the blockchain via token,
you're not going to have to go back
and do a survey every single time because it's going to be on blockchain.
You're going to have complete confidence that that is accurate.
To the extent those change those boundaries,
those changes and boundaries are going to be put on the blockchain.
So the concept of tokenization, again, most people think about cryptocurrency
and you know, you can have your thoughts of whether that's the future or not.
In terms of money,
we're much more interested in the sort of the tokenization of everything else
because that really relies on the underlying technology, which is
which is blockchain.
Now, one of the big questions I always get is
Marissa Well, why like what is the benefit of having these tokenized?
What's the difference?
Why do I need all this stuff and what I'm going to go through
are the top six benefits that I see of tokenization.
And then in future videos we'll go and break these down a little bit further.
But for now, I just wanted to list the following six items.
Number one is liquidity.
Number two is transparency.
Number three is low cost middlemen.
Number four is operational efficiencies.
Number five is its immutable character, which means it cannot be changed.
And number six is that it presents additional capital raising channels.
So all this is possible through blockchain technology,
and this isn't going to be a video on what blockchain is or how it works.
But the way I try and explain it,
so at least you get your mind around it and it becomes sort of understandable.
So you understand these other concepts.
It's just think of it as an Excel spreadsheet.
Everybody's familiar.
Most of you guys are familiar with an Excel spreadsheet.
So blockchain really is an Excel spreadsheet
that you just have complete confidence is accurate, right?
We're not going to get into the ways we are confident that it's accurate.
But just imagine you put together a spreadsheet
and you put together the ownership.
Maybe the capital stack of that property.
All that information about the meets and balance and the title
and all the information is in a spreadsheet.
And you are 100% confident that that spreadsheet is accurate.
It's owned by a bunch of people and everybody has access to it.
But if somebody came to you and said, look, Mauricio is the owner,
look at the spreadsheet, it shows Marissa is the owner.
You're going to be confident that Marissa is the owner because it is immutable.
That spreadsheet cannot be changed without your approval.
And what's cool about it is that when it does get updated
or changed, think of it as a separate tab in that Excel spreadsheet.
So maybe the original owner was Mauricio,
and then Mauricio transferred that property over to Ken.
Well, that's that transfer to Ken is going to be reflected in a separate tab.
So it's not a perfect analogy.
I know there's a lot of purists out there that are going to come out with all the
all of the reasons why.
That's not the perfect example.
But when you hear blockchain and you're
trying to get your mind around it, just think of it as an excel spreadsheet.
After all, it is a distributed ledger, and ledgers
come from accounting rules, and it really is an Excel spreadsheet.
So next time you hear blockchain, think of it as an Excel spreadsheet
that everybody agrees is accurate, that it can't be changed.
There's the top security
and you have complete confidence that the spreadsheet is accurate.