How can SolidBlock tokenize real estate?

BTC ECHO from Israel

“The best place to found is the USA, but Israel is right behind it”, according to former Google CEO Eric Schmidt in 2016. The focus of many innovations coming from the Middle Eastern country is on the tech sector. For example, the first Motorola mobile phone, the first USB stick and the first commercially usable firewall were developed in Israel.

In recent years, start-ups in the fields of fintech, enterprise IT and data infrastructure and security technologies (especially in the field of cybersecurity) have received financing in the small country on the Mediterranean. This also belongs to this group startup by Yael Tamar and Yuval Wirzberger. The two founded SolidBlock in 2018. Their company is “on the corner of fintech and proptech and our real estate tokenization relies heavily on blockchain.” BTC-ECHO visited the Middle East’s Silicon Valley to hear what that means. In conversation: Yael Tamar, the CEO of SolidBlock.

BTC-ECHO: What is your motivation for introducing blockchain technology in the real estate industry?

YaelTamar: At SolidBlock, we work to democratize real estate investing. Banks and other traditional lending institutions have made it harder than ever for young buyers to purchase a property. With no viable alternatives, millennials have been deterred from the dream of owning real estate. At the same time, given the high inflation and the decline in the real estate supply, token properties are again becoming an attractive alternative. Our work is not changing the real estate market. We’re changing the way ownership is determined.

We do this by aligning the process of raising capital with the needs and expectations of property owners. Thus, tokenization can reverse the downward trend in supply. In addition, it will change the way property owners raise capital, making real estate investing accessible beyond the heavy iron gates of the big financial institutions.

Nevertheless, it must be noted that regulation remains a challenge. Fortunately, things are actually changing. Nothing is final yet and it remains to be seen how the final provisions will ultimately turn out. But since things can’t possibly get any more restrictive, any progress is good news for tokenization.

BTC-ECHO: Could you explain what the tokenization process looks like?

Real estate tokenization is a new trend that represents the convergence of real estate investing and blockchain technology. Tokenization helps asset or fund owners raise capital more efficiently and offers investors unprecedented access to private real estate investments, transparency and liquidity.

Tokenization is a relatively new term used to describe a cryptocurrency fundraising where investors exchange fiat or cryptocurrency for “tokens.” In short, tokenization is a way to securitize real assets.

Securitizing an asset means dividing it into shares that can be sold to investors. “Tokenizing” an asset means breaking it down into shares or “tokens,” which represent a predefined portion of the underlying asset. They are therefore often referred to as “security tokens”. These tokens are secured by the immutability of blockchain technology and – if desired – can be traded via crypto exchanges or alternative trading systems (ATS). At the same time, smart contracts help to secure and automate the process.

Now, when an owner decides to tokenize a property, an Ethereum Standard (ERC20) property token (also called a security token) is created, representing shares in the property. The total value of all tokens corresponds to the total value of the securitized asset. Overall, the tokenization process can take several months. The length of time depends on how many of the required documents an owner already has.

SolidBlock’s role is to provide the means by which tokenization occurs. In addition, the respective project is then advertised on our digital marketing platform like a house or a plant. In short: We are basically an end-to-end platform for wealth owners.

BTC-ECHO: What do you think, will there ever be a (legal) global platform for tokenized real estate trading?

Well, SolidBlock is working towards creating a fully decentralized global real estate platform that we call the SolidBlock Ecosystem. It will democratize access and provide better access to the liquidity needs of both property owners and investors. Our schedule initially envisages an initial coin offering from SolidToken later this year.