Asset tokenization allows converting ownership rights to real-world assets such as real estate into digital tokens on blockchain. This provides benefits like increased liquidity, fractional ownership, and global access for investors. Several startups are developing platforms for real estate asset tokenization using various models. For example, Brickblock allows investors to purchase tokenized shares of individual properties. Challenges include ensuring regulatory compliance, addressing legal issues around property rights, and developing trusted technology solutions. Overall, asset tokenization has potential to significantly transform traditional asset markets.

1. Asset Tokenization,
Real Estate Reinvented
Jongseung Kim
(deframing@gmail.com)
2018. 11. 13

2. Why Asset Tokenization?

3. Blockchain Initiatives(Gartner)
New Biz.
Development
EfficiencyPlay
Digital Asset
Market
RecordKeeper
Crypto-Wallet
ID/Authentication
BlockchainDisruptor
(Startup)
Logistics
Crypto-Exchange
SupplyChain
P2PEnergyTrading
RealEstateService
P2PInsurance
DigitalGoldService
CarbonTradingSocialPlatform
HealthRecord
LandRegistry
DigitalVoting
BlockchainCorePlatform
Legacy
Transformation
Short-Term
Value Driven
(Legally approved)
ReduceCost
(Legacy Integrated)
ICO Driven
ReduceFraud
Mid-Term
<Source:PayAttentiontoThese4TypesofBlockchainBusinessInitiatives(Gartner,2018)>

4. Signs of the new Blockchain World(PwC)
The representation ofreal or virtual assets
on a blockchain is spreading to raw materials,
finished goods, membership rights, and more.
Tokenized Everything
Using blockchainwith theirERP systems,
companiescan streamlineprocesses,
facilitatedata sharing,and improve data
integrity.
ERP + Blockchain
Initial coin offerings,in which a company
sells a predefinednumberof digital tokensto
the public, are a growing alternativeto
classic debt/capitalfunding.
ICOs are the Self-Funding Tech
Accordingto the survey,financialservices
are the currentand near-termfutureleader
of blockchain,but also thereare potentialin
energyand utilitiesand healthcare.
New Leaders Emerge
<Source:https://www.pwc.com/gx/en/issues/blockchain/blockchain-in-business.html>

5. What is Asset?
<Source:https://en.wikipedia.org/wiki/Asset>
 In financial accounting, an asset is an economic resource.
 Anything tangible or intangible that can be owned or controlled to produce value
and that is held by a company to produce positive economic value is an asset.
 Assets represent value of ownership that can be converted into cash(although cash
itself is also considered an asset).
• CurrentAssets: Cash and cash equivalents,
Inventory,Prepaid expenses
• FixedAssets: land, buildings,machinery,
furniture,tools, IT equipment
Tangible Assets
• Goodwill, copyrights,trademarks, patents
and computerprograms,etc.
• Financialassets, including suchitemsas
accountsreceivable, bondsand stocks, etc.
Intangible Assets

6. Asset Tokenization
<Source:https://blog.softwaremill.com/asset-tokenization-on-blockchain-will-disrupt-the-asset-management-landscape-befbd71639b1>
Asset tokenization allows to convert the rights to assets with economic value
into a digital token.
By tokenizing assets you can start trading them in a cryptocurrency fashion
and managing their value exchange under contract written on blockchain.

7. Asset backed Tokens
<Source:https://en.wikipedia.org/wiki/Property_rights_(economics)>
Property
(Asset)
Rights
Right to Earn Income
from the Good
Right to Enforce
PropertyRights
•Needto be RegisteredLegally
•Profit isDivided
Security
Token
Utility
Token
Right to Transfer
the Good to Others
Right to Use and
Occupythe Good
•TimesharewithoutOwnership
•AccessisControlledby Contract
-Tokensaredigital
representationsofreal-
worldassets,arethus
backedbythem
-Rightsaregratedtothe
tokenholders.

8. Digitization vs. Tokenization
<Source:https://bankex.com/static/whitepaper.214a1621.pdf>
• Automatedsmart contractsfor deal execution
• Commandsfor automatictransactions
• Formulasfor calculationof the asset price
• Automaticvalidationof the initial data
Tokenization = +Digitization Financial Components

9. Tokenizing assets : 60+ blockchain startups
<Source:http://researchly.leobosankic.com/2018/06/29/blockchain-companies-tokenizing-the-real-world>
RealEstate Realisto, Bitproperty,DomusCoins,imbrex, Brickblock
Utilities WePower Network, water.bankex
Commodities OneGram, Orocrypt,DigixDAO,ChainTrade,Smartlands, GoldMint
People TokenStars
Collections:Artandtradingcards Maecenas,Ether Legends
MediaandApps:Financingmovies,
Instagramaccounts,Apps
MovieCoin,AppToken,MEDIATOKEN
Traditionalfinancialassets Blackmoon Crypto,Smartlands, Dharma, CoinLoan,BlockchainCapital

10. Benefits of Asset tokenization
<Source:https://www.linkedin.com/pulse/asset-tokenization-using-blockchain-new-trend-2018-stan-pearson>
 Liquidity of assets / Liquidity Premiums
 New economic models around asset ownership, such as fractional ownership.
 Diversification of risk arising out of asset ownership
 Eliminating temporal/territorial barriers for asset owners for attracting investments
 Reducing entry barriers for trading and investing
 Newer models of raising capital, by allowing projects that are under development
to issue shares in form of tokens to finance project development
 Utilizing network effect for certain products to increase their popularity in the
market, by providing direct financial incentive to fractional owners
 Reducing administrative expenses

11. Real Estate Asset Tokenization Service Cases

12. Global Real Estate Universe in Comparison
<Source:http://www.savills.com/impacts/economic-trends/8-things-you-need-to-know-about-the-value-of-global-real-estate.html>

13. Global Real Estate’s Annual Growth
<Source:http://www.savills.com/blog/article/216300/residential-property/how-much-is-the-world-worth.aspx>

14. A First For Manhattan : Real Estate Tokenized With Blockchain
<Source:https://www.forbes.com/sites/rachelwolfson/2018/10/03/a-first-for-manhattan-30m-real-estate-property-tokenized-with-blockchain>
 The building, a completed 12 unit
construction with 1700 sq ft units
located on 436 & 442 E 13th St in
the East Village, is the first major
asset in Manhattan to be tokenized
on Ethereum.
 The property has recently been
appraised at more than $30M.
A luxuryManhattancondo development

15. 44 Real Estate Cryptocurrencies
<Source:https://cryptoslate.com/cryptos/real-estate>

16. Brickblock : How IT Works
<Source:https://www.brickblock.io/real-estate.html>

17. Brickblock : How Simplifies Investing
<Source:https://www.brickblock.io/real-estate.html>

18. Brickblock : Investment Opportunity
<Source:https://platform.brickblock.io/invest/property-schoenberg-gmbh/0xcbf23082233ebf2b97a986b4d05669472d744e3c>

19. Crowdvilla : $24,900,000 in properties’ contributions
<Source:https://crowdvilla.io>

20. Crowdvilla : Model Overview
<Source:https://crowdvilla.io>

21. Crowdvilla : Token Point System
<Source:https://crowdvilla.io>
 Each Crowdvilla Token(CRV) denotes a share of time-value for the use of all properties
in the Crowdvilla portfolio.
 CRV holders earn Crowdpoint Tokens(CROWD) in perpetuity(i.e. on an ongoing basis for
as long as the portfolio exists).
 CROWDTokens are used to book stays in the properties.
 The number of CROWDTokens generated is proportional to the number of CRV Tokens
held and the length of the holding period.

22. REIDAO’s Model
<Source:https://reidao.io/#benefits>
 Every real estate that is registered
will have its own Ethereum address
where users can visit and retrieve
information about the property,
including its ownership details.
 REIDAO’s unique property token
will follow a certain standard that
makes it usable for other services
built on the Ethereum blockchain.
Affordable, Diversification, Market Liquidity, Versatility, Global, Security

23. Primalbase : Mission & Business Model
<Source:https://primalbase.com>
Primalbase is transforming traditional office rental and creating a next-generation
community-based ecosystem where it is possible to share, sell or rent out high-quality
working spaces using Ethereum and Waves-based digital tokens.

24. Primalbase : Workspaces
<Source:https://primalbase.com>
Tokenpossession provides unlimited lifetimeaccessto all Primalbase workspaces.
• 1 PBT— 1 workspacefor 1 person at any location.
• 4 PBT— 1 private office for max.2 weeksdependingon its availability

25. Imbrex : Vision
<Source:https://imbrex.io/#!>
Imbrex is founded on the principle that the real estate industry should be in control of
its proprietary data. Listing agents should have direct access to their leads and
exposure on a global real estate network.

26. Imbrex : Data Escrow Contract
<Source:https://www.linkedin.com/pulse/official-guide-real-estate-blockchain-stephen-king>

27. Asset Tokenization Platforms

28. Tokenestate : Tokenization as a Service for Real Estate Funds
<Source:https://tokenestate.io/index.html>
 Tokenestate provides an end-to-end
solution for real estate fund managers
to tokenize their fund, issue their own
real estate tokens in form of
cryptosecurities and access to a large
pool of retail and institutional
investors.
 Tokenestate will take care of all legal
aspects, required technical solutions
and the fund raising process.

29. Tokenestate : Conceptual view of Tokenestate.io, TEIVs & RETOs
<Source:https://tokenestate.io/Tokenestate_io_Whitepaper.pdf>

30. Bitproperty : Vision
<Source:https://btptoken.io/en>
 Bitproperty is a decentralised real estate
platform powered by Ethereum smart
contracts.
 Bitproperty has two types of token: the
BTP platform token and individual
property asset tokens.
 BTP tokens represent the inherent value
of the platform and provide holders with
income from transaction fees within the
platform in proportion to the amount they
own.

31. Bitproperty : How it works
<Source:https://btptoken.io/en>

32. Bitproperty : Real Estate Purchasing Due Diligence
<Source:https://realisto.io/files/papers/Whitepaper/REALISTO_Whitepaper_V1.2_EN.pdf>

33. Bitproperty : Offering Projects
<Source:https://btptoken.io/en>

34. BANKEX : Operating system for capital markets
<Source:https://bankex.com/en>
• BANKEXis developing atokenizationecosystem,providing technology/servicesat everystage.
• BANKEXbrings bank-as-a-serviceand blockchaintogetherto transformcapital markets.

35. BANKEX : Tokenization Process
<Source:https://bankex.com/static/whitepaper.214a1621.pdf>

36. Swarm Fund : Mission and Swarm Platform Structure
<Source:https://swarm.fund/swarm-basic>
 Swarm Fund is the blockchain
for private equity.
 It’s a fully decentralized capital
market place that
democratizes investing by using
the power of the blockchain to
open up high-return,
alternative investment classes
to smaller investors through
asset-backed funds using
cryptocurrency tokens.

37. Swarm Fund : Basic Structure of the Swarm Token
<Source:https://docs.swarm.fund/swarm-whitepaper-eng.pdf>
SRC20 security tokens :
• representownershipof part
of an object or “asset”,
• allow holdersto manage
that asset through voting,
• securea right to any
revenuestreamsfrom the
asset, and
• are tradablein a regulatory
compliant manner.

38. Issues and Beyond

39. Token Model in Real Estate
Utility Token Security Token
 A Utility token gives a user an access
to a product or a service.
 Utility token is essentially the
currency unit in the ecosystem.
 Services can be bought and paid for
with this, members can be rewarded.
 Each Security token is unique to the
asset itself.
 A Security token represents actual
ownership of an asset.
 Security token generates income
derived from the ‘asset’.
ReplicatesDebt
AlignedIncentives
ReplicatesEquity

40. Problems and Challenges
<Source:https://www.linkedin.com/pulse/asset-tokenization-using-blockchain-new-trend-2018-stan-pearson>
Trustedissuers
• Asset backedtokensneedto be based on the certaintythat using the tokensin
any future point of the time, the participants can redeem their real-world assets.
Regulatory
Vacuum
• Currentlythere is regulatoryvacuumover a big numberof questionsof how will
this space shall be regulated.
Legalenforceability
ofpropertyrights
• The fundamentalquestionis whetherowningtokensconfersownershipover the
correspondingasset.
Digitalidentityand
KYC/AML
• Digital ID marketplaceneedsto be integratedinto the tokenizationplatforms
that meetthe stringentstandardsof biggestregulatorybodies, such as SEC.
Assetvaluations/
rating
• Thereis a needof trustedintermediariesand oraclesto provide such valuation
and rating data on asset backedtokens.

41. Technology Issues
 Almost all theAsset tokenization projects’technology is based on Ethereum Platform.
 If all the access(use or occupation of the asset) controls are executed through smart
contracts, transaction fee issues are remained.
 For the near real-time transactions off-chain technologies are needed.
 The function of access control has to be integrated to the IoT(Internetof Things)
Technology.

42. “The technology is still new and
many legal questions remain unanswered.
But tokenization stands to bring massive opportunities
for growth and diversification to the asset market.
We will see major breakthroughs in this area soon!”
<Source:https://www.linkedin.com/pulse/asset-tokenization-using-blockchain-new-trend-2018-stan-pearson>