How Tokenization May Change Construction Market

Current state

Over-regulation of the end users market lead to the rise of demand on democratization of construction sector that saw cryptocurrency market as the light at the end of the tunnel. Once the global audience believed that there’s a chance not only to to enter this market, but also withdraw from it — not empty-handed, but with considerable dividends — the liquidity increased exponentially, cryptocurrencies went sky-high and the number of ICO launches moved beyond a hundred per month.

Apart from the fact that a shift to digital format brings about the increase in speed, security and usability for handling operations, it also leads to decrease in need for middlemen.

Changes to take place

Such changes in the infrastructure are meant to bring about numerous positive shifts:

  • Functionality: there will be new plugin modules created — business logic and Smart Contracts;
  • Security: the opportunity to conduct transparent audit in real-time mode with a complete access to current results for all parties, and also a bulletproof data synchronization among traders;
  • Management: collective asset management that does not require mutual trust;
  • Speed: calculations take several seconds, not days;
  • Usability: web-interface that eliminates the use of software and offers intuitive navigation.

For instance, today assets are sold by undivided parts, as specified by the building plan (apartment/office). In real life, it means that an apartment may have a very few joint owners (usually this is due to incremental costs like papers processing). If an investor believes in growth of square meters in a specific apartment block, he/she has to buy a specific apartment with both its advantages and disadvantages. Plus, he/she is obliged to pay total cost of the apartment and not the cost they are ready to invest.

Tokenization allows to release tokens corresponding to micro shares in an apartment block. For instance, tokens may equal to square meters. In such a case, certain construction company acts as an emitent of tokens, while investors are able to get their shares in the apartment block without buying specific apartments. They can buy more tokens directly from a developer and expand their share or sell any amount of residential area on the exchange. Thanks to this opportunity, they are able to pay up the area step by step without the need to save up the money, which may lead to financial losses due to inflation pressure. Later, if wished, investors can exchange the necessary amount of tokens for a specific apartment/office. Once investors hold all tokens and trade them, the emitent company rents these assets out and distributes profits among all token holders.

Interesting is the fact that if all buildings in a district are tokenized, there may be a specific token created that will represent an average share of real estate in the district.

Thus, investors are able to invest in cost growth of the real estate of the whole district. For instance, they can follow this pattern if a new Google office or metro station is about to be built in that area. In fact, we may create indexes assigned to cities and countries. All this will empower investors to choose investment strategies that best meet their needs — they can start from a single building to a whole country.

Simply said, tokenization is a process of transformation, storage and management of assets, when each and every asset has its corresponding digital duplicate.

Construction Market Realities

By 2050, about 75% of global population will be living in metropolitan cities and they will need some 3 billion homes built. It is obvious that in order to complete such work volumes, it might take ages, if migrant workers are used. The construction universe is in the need of a brand new approach. Moreover, it’s important to keep in mind natural disasters, since when they occur, buildings constructed in a traditional way are magically transformed into vertical coffins. In this case, self-sustainable buildings are a must.

Talking about government contracts, they are only good for huge volumes of apartment blocks, which are completely impractical for contemporary life.

There’s a need in a platform that will enable the community to vote for construction projects, empowering each and every user to monitor construction stages and make transparent payments with minimal sums.

We believe that building boom is not gonna happen in the West, but in the following parts of the world that are characterized by both high population density and urbanization — Africa, Asia and South America. These are dynamically developing countries which population is thought to actively shift to cryptocurrency due to the tendency of water supplies shortage and massive urbanization.

It is suggested that once the global population reaches 9 billion people, the capitalization of construction market — currently amounts to $100 trillion — will dramatically increase and be rated in cryptocurrency, with Asia, Africa and China to head the list — 70–80% urbanization.

In the light of the above, even now construction market tokenization and cryptoinvesting platform may change outdated dogmas in this industry and offer a brand new niche.

Solution

BitRent is that very solution we need for tokenizing the construction industry.

BitRent platform aims to dominate the construction industry in the next few years by dividing buildings into small construction elements and tokenizing them. Thus, the platform will open the way for more and more people to become investors and change the outdated and unprofitable construction formula. We follow a well-established and trustworthy model — construction objects are divided into shares, and these shares are tokenized.

We have already started development on the Ethereum network due to the fact that it is the most advanced Smart Contract Blockchain today. Smart Contracts are meant to ensure the safety of the mentioned above shares and fulfillment of all contacts clauses. As for the proof-of-asset token, it will be an ERC20 token.

All in all, BitRent is currently creating the environment where all sensitive construction & investor data will be secured and all contract terms fulfilled, without the need to involve third parties.

Right now, construction tokenization offers a new set of investment and profit-making opportunities for millions of people. In fact, this technological advancement brings about a completely fresh way for people to interact with construction objects and draw significant profits.

GitHub: https://github.com/bitrent/

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