The soaring prices of bitcoins have further solidified the image of John McAfee, one of the legendary figures in the IT era and “Godfather of Antivirus Software”, as a prognosticator of sorts. As Bitcoin topped 10,000 USD, on November 29, McAfee further revised his well-known prediction on Twitter:
“When I predicted Bitcoin at $500,000 by the end of 2020, it used a model that predicted $5,000 at the end of 2017. BTC has accelerated much faster than my model assumptions. I now predict Bircoin at $1 million by the end of 2020. I will still eat my ** if wrong.”
Apart from his liberality in the use of language, the billionaire has long been actively involved in the Blockchain industry. One of his latest decisions involved a deep strategic partnership with i-house.com, a Blockchain-based global real estate platform.
The pains of global asset allocation and overseas real estate investment
Let’s take a look at the broader industry background behind i-house.com. With the rapid development of China’s economy over the past decades and the accumulation of wealth by its ordinary citizens, their demand for more diversified asset preservation and growth is also increasing. As a result, the concept of global asset allocation has increasingly attracted public interest and the threshold for participation moved from the ultra-high net worth community to individuals earning a middle-income or more. Among the avenues of investment, the overseas real estate market has evolved to become one of the most important channels of global asset allocation.
According to the 2016 China Outbound Investment Capital Watch Report by DTZ/Cushman & Wakefield, China’s overseas commercial real estate investment in 2016 totaled $ 38.3 billion, an increase of 49% over 2015. Although the figure witnessed a substantial decline in 2017 due to a slew of factors and it is doubtless that investors are cautious and have adopted a wait-and-see attitude under the current restrictive policies, demand, albeit under suppression, for outbound investment is still rising.
Indeed, compared with other overseas investment approaches, the threshold and risk of real estate investment are relatively low, and there are no professional requirements for investors. At the same time, real estate accounts for nearly 80% of the RMB assets of Chinese households, so they are relatively receptive to investment in the real estate sector.
However, overseas real estate investment is not without its caveats. The total value of real estate assets is relatively high while considerable risks inevitably exist in the areas of market, exchange rates, interest rates and legal matters. And drawn-out transactions, information asymmetry and even a lack of credibility all constitute possible pitfalls. According to China Business Network, some agencies reserve separate quotations for clients from the Chinese mainland in housing sales, and the premium rate could reach as high as 100%.
Furthermore, overseas residential investments are also subject to possible policy restrictions for individual investors. For example, several property investment hotspots in Canada and New Zealand either have or are planning to ban property purchases by non-permanent resident aliens.
Similarly, overseas developers also face their fair share of challenges. It often proves difficult to acquire financing for real estate development while the ROI cycle is long and the process of property rights transfer involves too many departments with ill-defined responsibilities and functions, not to mention that the limited liquidity of real estate has always been problematic.
Then, what solutions are on offer to tackle the above-mentioned problems? Blockchain technology may hold the answer.
Blockchain technology and real estate
Undoubtedly, the traceability, immutability and transparency of blockchain makes it a prime candidate for real estate applications.
In fact, at the government level, many countries have begun testing the use of blockchain technology in the registration of land and property rights. Georgia, Sweden, Ukraine, Brazil, Russia, India and other countries have either carried out or are planning to carry out relevant tests. Traditional land registration is expensive and inefficient, in contrast, blockchain technology can provide the basis for reliable, inexpensive and efficient land registration.
Blockchain technology will also play a crucial role in the field of real estate transactions. The Forbes Real Estate Council recently shared their take on how blockchain could promote the development of the real estate market through the following means: speed up the transaction process; increase transparency; secure online data storage; be cost-effective while trusted and make good information available openly.
In short, blockchain technology can make the complex process of real estate transactions transparent, increase the trust of all parties and reduce bureaucracy. The existence of a smart contract guarantees that all necessary steps are taken before funds are transferred, released from escrow or reimbursed to banks and the transfer of ownership is completed.
The distributed nature of blockchain will allow any party in the transaction to no longer rely on a single source of information, increase the trust of all parties, reduce costs and accelerate transactions.
In addition, when permitted by local policies and laws, the tokenization of expensive real estate enables split ownership, increases liquidity and allows more investors to receive the benefit of participation.
According to Savills’ latest world research report, the global real estate value amounts close to USD2.17 trillion, equivalent to roughly 2.7 times of the global GDP, 60% of the world’s mainstream assets or 36 times the total value of global gold mining (6 trillion). This means that real estate is the prime choice of saving and investing for countries, businesses and individuals around the world. The introduction of blockchain technology will enable this already sizable market to further its potential and even affect the global economy.
Of course, perfection exists in theory. Partly due to the professional and complex nature of the real estate market and its transactions, landmark blockchain startup projects have been few and far between compared with the blockchain boom experienced in such fields as finance, digital rights and supply chains. However, the i-house.com project, which has attracted the attention of McAfee, is expected to break the status quo.
i-house.com and IHT
The i-house.com project team has expressed their hope to integrate the global real estate market through the blockchain mechanism. By linking the blockchain mechanism with real estate, real estate developers, financial institutions and users are connected; real estate transactions are incorporated into the global “digital credit society”; and real estate transactions will play an important supporting role for economic development. All real estate owners and investors will be able to benefit from the i-house.com real estate blockchain mechanism.
Specifically, i-house.com will achieve these goals through its IHT technology, developed on the basis of Ethereum blockchain technology. It utilizes blockchain’s intrinsic advantages such as distrust mechanism, anti-tamper, information transparency, co-supervision and traceability to split high-value real estate into smaller shares through the IHT smart contract technology to be allocated to financial institutions. As a result, users are provided with the opportunity to invest in smaller amounts and still benefit from real estate investments, and the security and low risk of investment are guaranteed.
IHT draws on traditional real estate investment tools, such as REITs, which enable asset holders to expediently trade ownership and income rights of real estate assets through third-party pre-audit, risk control, and asset income forecasts. The following advantages are demonstrated through the process. First, real estate investments are made small, movable and transparent. Second, exceptional transactional convenience. Third, transparency of information.
It should be pointed out i-house.com works with licensed financial institutions to ensure compliance with applicable laws and regulations by all listed assets. This constitutes one of the keys advantages and guarantees of the project.
According to the project team, the current phase of commercial development indicates that both the real estate end and financial institutions have displayed great enthusiasm for i-house.com and IHT. i-house.com, which has its eyes set on the global real estate industry, plans to expand its operations to the United States, Australia, and Europe from 2018 to 2019. By 2020, more than $ 50 billion worth of assets will be blockchained and available for sale.
In fact, this project harbors a broader vision. i-house.com revealed that in its future development blueprint for IHT, all assets with exchangeable value in addition to global real estate, will also be incorporated into the IHT blockchain. Aircraft leasing, artwork, antiques and marketable securities are a few examples.
The question of if i-house.com, which has welcomed to its fold McAfee as a strategic partner, can truly introduce blockchain technology to the global real estate market and thus bring about changes and improvements to the sector, remains.