A Blockchain Building in Bushwick

All together now repeat after me:"housing market crash". This has to be one of the worst ideas I've ever heard since Bitcoin. Not every idea put out by a couple of tech dudes in Brooklyn is a GOOD idea.

In trying to get my mind around fractional ownership, I come back to two thoughts: 1) When you create a distance between ownership and responsibility, no good can come of it. If a building has 50 or 100 fractional owners, who maintains the building? Who ensures that tenants are behaving, or that their units are maintained to code? Who collects rent and what happens if tenants don't pay? To me fractional ownership means nobody is in charge. If I'm wrong, I am happy to be 'splained properly. 2) How do you value an asset that is shifting in two dimensions? Fractional ownership means that these pieces will be traded as some kind of secondary real estate market. Who values 1/25th of a studio apartment in Chelsea, when it hasn't turned over in, say, 5 years and no other fractional pieces have sold as 'comps"? Add in that both the property value and the currency can fluctuate, the latter fairly wildly. I respect the push to disrupt the real estate market, and especially to disintermediate real estate brokers and will be extremely curious to see how all this pans out.

OMG, I don't get how ANY of this is supposed to work. I feel like I'm Mowgli in The Jungle Book and Kaa the python is hypnotizing me with his eyes, singing "Trust in Me"... The whole bitcoin thing is beyond my comprehension, kind of like those internet banks that have no branches, but, go ahead, send us your money and we'll take care of you as they softly sing "Trust in Me"...

Interesting that other forms of title registration have been overlooked yet Blockchain is considered an alternative Torrens Title revolutionised is a system where land ownership occurs when the document that transfers ownership of the property is filed at the local Land Titles Office. The purpose of the Torrens system is to provide certainty of title to land. The Torrens Title System resulted from a desire to improve on the old English land law system which was very complex, time consuming and expensive. ‘Title by registration', eliminates grounds for most dispute litigation, avoids the consequences of lost certificates and greatly reduces the costs of land sale and transfer. This concept is known as 'indefeasibility' of title. There are, however, a few exceptions to this general rule such as if the land was registered fraudulently. People can change the Torrens Register through lodging and registering a ‘dealing'.Once registered on the Torrens Title register you become the owner of the property to the exclusion of all others. A Certificate of Title containing a reference number, ownership details, easements and/or rights of way affecting the land and any encumbrances including mortgages, leases and other interests in the land.

I wonder if this will effect real estate in the same negative way that stocks have impacted the world, since their inception back in The Roman Republic (according to Wikipedia). When buildings are owned by multiple "share holders," from all over the world, whose only interest in the property is whether the value of their token goes up or down, won't that create the same type of shortsighted "corporate" decision making that pollutes the atmosphere, and endanger millions of workers. Will decisions be made with the same myopic logic, and have similar detrimental effects to the neighborhood, and tenants? If this is the future, is there a way to incentivize thoughtfulness.

I'm chuckling on behalf of the hypothetical disgruntled avocado toast eating millennial who can't afford to buy an apartment but instead manages to access a small factional share (or token) in a building in Bushwick. Isn't the whole idea of owning real estate that you might actually get to live there? The future is looking so bright! It's also funny to me how this article fails to comment on how building maintenance might be handled. Who would be there to trouble shoot problems as they arise? How would token rich tech bros with really good WiFi deal with toxic mold on the 4th floor?

I'm fed up with the way we embrace novices as "disrupters." Mr. Page and Mr. Shaikh posess the same hubris as Trump and Cynthia Nixon. These bros may know something about blockchain, but I doubt they've been around the block when it comes to real estate transactions/ownership/investment.

It reminds me of a REIT - except more forcused and less regulated.

Chopping up housing into little bits for investment purposes ~ that worked so well with banks trading subprime mortgages. Pandora needs to give a Ted Talk.

Wow. I'm feeling really old. Reading this article, I am absolutely clueless about the value equation using blockchain technology for real estate investment. If I buy some of these tokens, do I have any responsibility for Real Estate taxes? Apartment or building maintenance? Other ownership responsibilities? What happens if the apartment or building is sold? Do I get a piece of the profits or have to absorb a piece of the loss? Or is buying and selling these tokens similar to the run up to the real estate crash of 2008 -- when we had sub-prime mortgages that promised to give people a way to get a piece of the real estate pie, and we had the Mortgage Backed Securities ("tokens"?) that banks bought and sold like Monopoly money? If this is, indeed the model, then blockchain technology seems as though it democratizes the greed that almost destroyed the US economy. So, what is the value equation? Is it really just assigning value to things that have no inherent value? And, allowing the "get a piece of the pie" meme to drive up prices until the bubble finally bursts?

I get the feeling that this technology is primarily about fooling the tax man.

Partners negotiate operating agreements in detail because real estate requires constant care and decisions on development, leases, sales, repairs, compliance, maintenance, etc. I wish this article explained how blockchain solves actual problems with real estate transactions. The financial transaction, which blockchain accomplishes handily, is not itself difficult in real estate. On the other hand, we desperately need a comprehensive database and public interface to manage and view the vast data concerning properties, construction permits, transactions, and gov't actions. This doesn't necessarily need blockchain, but it would be great for the private sector to step in and solve this.

The premise of this venture is that blockchain technology can allow small investors access to real estate ownership, giving a larger number of people a piece of the pie, and maybe even allowing them to own some fractional part of the home they live in. It's a compelling vision, but there are significant legal and economic challenges to its realization. First, the current implementation covers only trading fractional shares of an LLC. Putting aside that a distributed ledger isn't necessary for that, the requirement that purchasers be accredited investors (annual income of $200K or net worth > $1MM) effectively bars the small investors from participating. Even if Meridio could change Federal securities laws to get around that, the dotcom bubble of the 90s and the more recent Bitcoin bubble demonstrate what happens when technology increases the velocity of trading in an asset class. Allowing investors to trade shares of property in a market like New York on a web site would almost certainly create upward pressure on housing cost. Small investors who purchased a small fraction of their apartments might realize a slight profit, but not enough to keep pace with their rent, and would probably be displaced. Real estate firms investing in Meridio might have good reasons for doing so, but enabling the little guy to keep his apartment probably isn't one of them.

This is an example of DJT's winning approach to the economy. The only folks who win are those who are wealthy to begin with and low or middle income people can watch the parade of those winners. I guess all low and middle income will say, 'please DJT we cannot take so much winning'. And his bas would say, he kept a campaign promise. Call me crazy, but that above description/campaign promise reminds me of that old Twilight Zone episode entitled 'To Save Man'. The aliens arrived and provided a book to the humans entitled To Serve Man. The aliens invited humans to visit their wonderful planet and the population went along smiling. One day someone looked inside the book and discovered it was a cookbook. Morale to the story, 'winning' for one guy may not mean 'winning' for another.

This story also needs discussion about the negative environmental impact of block trading - incredible amounts of energy required.

Credit cards...Venmo works too...These guys spent too much time in Mom's basement finding a solution for a problem that doesn't exist. More financial voodoo that reminds me of CDO's from 2008. No thanks.

At this point I think tech bros looking for something new that has not been invented yet just ask themselves, how can I make life worse for poor people? What can I take away from them?

When I first heard of the blockchain iced tea company, I laughed, and then I realized there are indeed plenty of idiots out there who would buy something just on a name. And so, you have to excuse me for being very cynical with this so-called killer app noted in the article. A bit of disclaimer: I work on a BC initiative in one of the large companies, so I'm quite familiar of what it can (and can't) do. Some of those claims of benefits are real, but BC is not a panacea to cure cancer (in case you haven't heard). As to this startup, let's just say, there are middlemen that are totally unnecessary, and then there are "middlemen" that are there for a reason. Do you really want to buy a property without a lawyer? Most people need a mortgage to purchase mortgage, would the mortgage provider allow it? Mind you, this is not a "technical" problem, but it's a legal problem. If you have not solved the legal quagmire of fractionalizing the ownership of a property deed the same way ETF would handle stocks, then BC would do NOTHING to help you (even if BC can store the various transactions in fractional ownership). The list goes on. All of us know that owning fixed assets like real estate comes with lots of overheads and ongoing maintenance. Is this startup set up like REIT to handle everything for investors? If there is legal issues, how would that be resolved? Transactions recording is but a very small but easiest part. It's what happens AFTER you own it that's hard.

How is this any different from a REIT?

So years ago managing transaction handling as a small but expensive and burdensome part of my work, visa in particular required security compliance and encryption protocols and testing in order to accept their cards. For the life of me I can’t see what is different here except that all sorts of risk and potential for chicanery has been wrapped around the original encryption technology like bacon on a hot dog. Also, I have not met a single “evangelist” for crypto-commerce who instills and trust and/or confidence in me - that my aversion to the whole scheme is not spot-on.

Blockchain operations are notorious energy hogs. How can it's proliferation be a good thing in today's environmentally ravaged works? Have these entrepreneurs tried to address making the operations more energy-efficient?

If available housing stock corresponded more with demand, would this potential application of the technology have emerged? Putting aside aspects of speeding transactions and streamlining processes aside - which could happen by other means theoretically - the story suggests more transformative possibilities, good and bad. It is hard to argue that the existence of lawyers, real estate agents, and paper protecting public bureaus has contributed to fewer barriers for entry in owning real estate, though. If owning is the principle means of financial stability in our system, then, it is difficult to argue for the non application of a technology that makes owning more accessible. "Accessible to whom" is another matter - but what of this era already of LLCs and untraceable foreign investors? If the "technologists" turned their attention to making the public sector more public, they might help make this century end better than it has begun.