Japanese real estate information giant, LIFULL, leads seed round for BitOfProperty

BitOfProperty, a company dedicated to providing international real estate investment opportunities by bringing down the high capital requirement, enhanced transparency and increased liquidity, has closed seed round financing with a lead investor LIFULL Co., Ltd. This follows a pre-seed round led by Spaze Ventures, a Singapore-based startup incubator.

The decision to invest into BitOfProperty was influenced by LIFULL’s goal to innovate and vitalize the real estate market in Japan utilizing information technology. BitOfProperty differs from other crowdfunding platforms by allowing small investments into rental real estate based on blockchain technology. The underlying technology helps to decentralize the real estate market by bringing more transparency and liquidity into international investing.

“The BitOfProperty platform is changing the real estate investment industry by making it easier, more transparent, and accessible than ever before. With LIFULL’s investment, as well as industry expertise and knowledge, we are poised to expand our business aggressively, as well as continue to improve our technology”, said Karl Vään, co-founder and CEO of BitOfProperty.

BitOfProperty provides a crowdfunding platform for international rental of real estate. All transactions are recorded using innovative blockchain technology. The platform has already been tested and the first investment deal has already successfully closed.

Keizo Tsutsui, Managing officer, LIFULL said, “We are excited to be partnering with BitOfProperty. We believe blockchain technology and sharing economy are key innovations for the future of real estate. We look forward to building a next-generation global platform for real estate investment.”

Currently, BitOfProperty is building out their platform to include new features to improve customer experience, as well as introduce more robust investment tools.


Why invest in brick and mortar?

When considering investing, the first thing that usually comes to mind is probably the stock market. It’s dynamic and heavily featured everywhere. However, in terms of size it is not the largest asset class. That badge firmly belongs to real estate.

Robust income returns aside, there are many reasons real estate has quickly become the most popular form of everyday investing in our current economic climate. It has the unique ability, bar natural disasters and other anomalies, to stay put and weather economic changes. It simply isn’t going anywhere.

Property is a tangible asset which unlike the stock market, bonds or cryptocurrency, doesn’t require a great degree of specialist knowledge as the workings of buying and selling real estate are relatively easy to understand. It also has that alluring and everlasting appeal of the notion of physical ownership not easily achieved with other investments.

Owning a brick and mortar property or even a portion of it has a different feel to it than numbers going up and down on a computer screen.

According to the Investment Association the property sector has returned an average of 42.3% over the past five years.

With increasing speculation over rising interest rates, as evidenced in several countries recently, investors have been reducing their bond exposure in favour of property.

In addition, recent stock market volatility has seen investors become fearful of committing more money to equities and the focus has returned to lower risk assets with many viewing real estate as a safer alternative. This serves multiple purposes: generating attractive income and protecting yourself in correlation to bond and equity markets.

With any investment it comes down to the bottom line. With brick and mortar the bottom line just happens to have a larger degree of longevity.


Understanding blockchain

The blockchain, once created by Satoshi Nakamoto, can be called a new type of internet or a digital ledger. First used to track the digital currency Bitcoin it’s now finding an increasing amount of uses.

What makes blockchain stand out is that it’s a distributed ledger where all the information is shared and continually reconciled. There’s no one place, where it’s stored. Instead it’s available on millions of computers all at once.

The blockchain has been compared to a shared Google spreadsheet or Wikipedia in the way all the information is publicly available and shared. In terms of security it’s rather like a row of safes, where each one has a special key that only the owner knows. Each safe on the blockchain is called a block and they’re all linked together so you can’t change one’s content without influencing all the others in the row.

The nature of the technology makes the blockchain truly public and difficult to corrupt. To corrupt the network one would need to override the entire network, which would require a huge amount of computing power.

The decentralization aspect of the network means that millions of computers are connected on a user to user basis and all that moves through the network has to be verified by all. Such mass collaboration has already opened up the blockchain for much more than just Bitcoin transactions.

Uses for the blockchain:

  • Smart contracts
  • Crowdfunding
  • File storing
  • Protection of intellectual property
  • Land title registration
  • Clearing and settlement for banks

Blockchain is able to record the information near real time, cheaply and safely, making it a definite competitor to traditional systems that we have in place.


The future of real estate: Blockchain

Blockchain has so far mainly been associated with cryptocurrencies but lately it’s finding uses in an increasing amount of business areas from banking and insurance to healthcare. The area that many have so far overlooked in association to blockchain is real estate. We have grown accustomed to opaque areas in the real estate business such as pricing or accessibility of international listings, which blockchain can easily help to change.

Blockchain explained

The concept of blockchain is very simple – it works as a distributed ledger that anyone can access. There’s also no limitations on the amount or type of data that can be stored enabling many different business areas to benefit from it. The entries to the ledger are almost real-time and have to be confirmed by all network participants, limiting fraudulent activity.  

Benefits of blockchain

  • High speed of information sharing

Blockchain speeds up settlement of transactions and reduces risks as records will be difficult to erase or cancel. If one copy of the ledger is compromised then other instances remain uncorrupted, making the network resilient to fraudulent activity.

  • Leaves out the middleman

Blockchain provides cryptographic proof of transactions that lets the two parties to come to a deal without needing a middleman for extra security.

  • Public transaction history

All transactions are publicly recorded on the peer-to-peer network. The blockchain therefore is a secure source of proof of transactions. It is increasingly difficult manipulate the network due to the growing number of participants.

Uses of blockchain in real estate

  • Due diligence

All prior transactions on the blockchain can easily be traced and digital identities checked, removing the time-consuming process that so far has been mainly done on paper.

  • Faster and smarter contracts

The terms of the agreement are recorded on the blockchain almost immediately and will be visible at all times. The contract will therefore be much more transparent than before and easily verifiable.

  • Incremental ownership of properties

Until now it has been difficult to sell 0,7 percent of property due to legal restrictions, but as fractional ownership of properties for investment purposes is on the rise, blockchain will enable to securely trace the size and value of such stakes. Smart contracts will make these transactions fast and easily traceable similarly as stock in companies is recorded on the exchanges.

  • Reducing the amount of participants in a deal

Usually real estate deals mean involving several people and authorities in the process. Such as estate agents, lawyers, local authorities, banks and many more depending on the country where the deal is made. All the participants hold a part of the information necessary for the deal and store it separately. Blockchain would allow the information to be held in one place referencing the asset and accessible to all. This would save up a significant amount of time and money for the participants involved.

Blockchain has disrupted the real estate industry already by making it faster, more transparent and easily accessible to smaller investors. There will still be many changes to come such as easily accessible listings worldwide and more widespread acceptance of cryptocurrency payments for real estate. It’s early to say how widespread the acceptance of blockchain usage in real estate will be but there are definite benefits to be seen for the industry.


Uudiskiri: Podcast|Platvorm|BIT002

Podcast Investeerimisklubiga

Kaks nädalat tagasi, reedel, oli meil au lindistada esimene podcast Investeerimisklubiga, Eesti suurima avaliku investeermiskogukonnaga. Podcasti eesmärk oli tutvustada BitOfProperty’t laialdasemalt nii alustavatele kui ka kogenud investoritele ning mõista firma ärimudelit lähemalt. Lisaks sellele puudutasime ka esimese eduka tehingu tagamaid kui ka firma tulevikuplaane ja -perspektiive.

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Newsletter: Podcast|Platform|BIT002

Podcast with Investment Club

About two weeks ago, we had an honour to do a podcast with Estonian Investment Club, the biggest public investor community in Estonia, where both starting and experienced investors can share experiences/ideas and gain more knowledge together in the investment space. The aim for this podcast was to introduce BitOfProperty to wider audience and to understand the business behind it. Also, we touched the first deal that was successfully funded on our platform and future plans/perspective for the company.

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