By: Elijah Levine
Whether you believe in the actual technology or have just heard about it through the general hype (or one of our below articles), it appears that blockchains and cryptocurrencies have now touched pretty much everybody’s life in one way or another.
Of course, everybody’s involvement is not the same. Some people might have downloaded an app on their iPhone to purchase some $BTC or $ETH (or even just to observe them), while others are deep in Solidity, Ethereum’s native coding language, building smart contracts to decide outcomes, infrastructure, fundraising, and governance, and more on numerous projects around the world.
What is a smart contract? Glad you asked, smart contracts are electronic contracts written in code that decide outcomes algebraically based on inputs, proof of information, or other required actions.
Many of the new layer-1s, such as $ICP and $ROSE, have easier to use and even more scalable smart contract capabilities than $ETH.
The possibilities of this technology are truly limitless as it is so applicable across industries. From government to real estate, music to gaming, auditing, healthcare, and more, the world is in need for major technological upgrades.
For centuries, we have observed business infrastructure and the legal system fail thousands of people around the world, data be mismanaged, and blatant fraud occur at all levels of private and public sectors alike.
Modern technology like blockchains and smart contracts are slowly but surely changing all of this, and a couple key players are leading the way.
In this article we will focus on those leading in the world of real estate.
To begin, I want to introduce the concept of a Decentralized Autonomous Organization (or “DAO”), which is one of the rare environments in which true decentralization, and therefore true democracy, can occur (if set up properly).
A DAO is basically an LLC that is governed via smart contracts and verified on the blockchain. Proper DAOs are registered with the state they incorporated in (only Vermont and Wyoming legalized DAOs thus far). A perfectly decentralized DAO would have a myriad of members and every member would have one vote.
Modern decentralized frameworks like DAOs have made the securitization of assets even more popular. At first, this securitization happened almost exclusively in the form of tokens (and many still do), but now more and more creators are looking towards even better solutions like DAOs, Non-Fungible Tokens (or “NFTs”), and other decentralized frameworks to securitize various assets.
It sounds complicated but it’s not. Most people don’t understand how many “NFTs” already exist out there and how many are used daily.
Some familiar examples (both physical and digital) are receipts, tickets, watches, TVs, food, basically anything that is uniquely identifiable (think serial numbers) and could in theory be traded. Of course, you would never make an NFT for food unless you planned on never eating it, because as soon as you ate it, it would cease to exist – although this could be thought of as a burn function in NFT lingo – just like you would never (or at least rarely) trade your food.
On the other end of that spectrum, your data that big tech companies are tracking and storing are also NFTs. Each data log of what specific websites you clicked at what specific times, or any and every other action you’ve ever taken online, is unique to you and immutably stored in one of Facebook, Google, and / or Apple’s data centers.
I believe that Web3 will not only bring the importance of data ownership to the attention of everyday people, but also allow those people to understand and participate in it. A growing amount of people are already starting to use NFTs, DAOs, and other modern decentralized frameworks in evermore creative ways.
Take Balcony DAO, for example, a group working to tokenize shares in investment properties through NFTs.
Not only does each person’s individual NFT represent their share of ownership in that given property, but they are working to build out the ability to deliver “data rooms” to investors via specific, KYC-ed NFTs.
The main benefit of this would be that those on both sides of the equation (the data viewer and the data provider) are certain of each other’s identity, but it would also create a more streamlined, secure, and organized way to view, compare, and continuously reference important diligence material.
Tokenizing real assets (and even fractionalized ownership of them) is not necessarily something that new, but delivering immutable, KYC-ed information through that tokenized asset (or even alongside it) is extremely novel, interesting, and promising for the space.
Even large institutional groups, like KKR, have been securitizing funds through tokens, but securitizing assets, even with tokens, still falls in the pretty traditional finance world- even though it is very cool and exciting to see more large institutions using blockchain technologies to do this.
More intangibly, we’ve observed “Metaverse” companies of all shapes and sizes pop up during the last few years, especially with the continued popularity of blockchains and online media.
That said, not many groups have done it all that well. The Sandbox might have reached mass consciousness and attracted major celebrities, but their platform looks like a crappy, half-developed game from 2010 or earlier.
These stylized facts become apparent in the data.
As of October 10th, 2022, The Sandbox had 616 Daily Active Users (DAUs) and Decentraland, another Metaverse product that was massively popular during the last few years, had just 23.
Blockcities, on the other hand, has developed infrastructure for the real world while leveraging the “Metaverse” in the process.
Designed to be a bridge between digital and physical worlds, Blockcities has created a digital twin of the earth to visualize and synchronize future upgrades in the real world. They did this by overlaying the entire world with high resolution Google Map images broken out into hexagonal land parcels that investors can purchase to own “land” in the Blockcities Metaverse.
All functionality is facilitated through smart contracts, with the ability to be exported as widgets that can show up in other systems. In the future, this will look like pins tied to real world locations, each pin with unique utility.
The plan is for all current functions of cities to occur in a much more efficient, transparent, and technology-enabled way. This includes everything from voting to bidding on open community projects, analyzing properties available for rent and purchase to owning shares of real world assets, and more.
While these functions may appear in a “Metaverse” setting, Blockcities has been built to integrate the physical world into functionality and application as much as possible.
At this point, it’s very important to understand that each of these tech platforms is and should be considered its own “Metaverse,” and that the word “Metaverse” really just describes any digital platform that allows users to interact simultaneously in the same place – even Instagram and Snapchat are examples of Metaverses in the truest sense of the word – although digital twins and AR / VR have pushed us towards accepting more of this new tech as the modern “Metaverse.”
Blockcities is doing a lot differently than many other Metaverses that I find particularly interesting. The first thing is that it’s structured as a DAO based on land ownership, which is very rare for Metaverse projects.
While many other projects have focused on community, Blockcities has focused on community but also utility for investors, starting specifically with governance. They are working to partner with local governments for the governance of Blockcities-owned parcels to be settled on-chain.
Establishing strong or at least some sort of communication between local government and highly modernized technology will happen eventually. The sooner that work starts, the higher chance of success, alignment, and progress on things we care about.
There are big problems facing us all, but tech can help us solve them.
Blockcities also encourages real ownership alongside digital ownership and has plans to deliver additional tangible benefits other than governance and community to landowners over time. Like many other Metaverses, there is a fee share for others doing things on (or sometimes even just visiting) your land in the virtual world.
Outside of the virtual world, Utah-based startup Estate Chain is one of many groups helping settle physical real estate transactions in crypto. However, Estate Chain and most of the other companies mentioned so far in this article are relatively new and / or startup companies. There are large groups in the space that have tried and true technology as shown by their transaction volume.
One company, called Propy, has done over $4B in transactions since its founding in 2015. Propy helps users settle transactions in crypto, ensure proper property title diligence and transfer, and even turn houses into NFTs.
As more and more groups continue to build and innovate in the space, it’s extremely exciting to see smart executers utilizing modern technology and working together to progress the tech-enablement of outdated industries.