Cryptocurrency projects which seek to tokenize real assets are going to run into the problem of rights enforcement. Operating outside of the long arm of the law means you don’t always have full access to its useful aspects, either, and so fraud may ensue. This is a drawback for all crypto assets which try to bridge the divide between the digital and the real. So while we must be cognizant of that, we don’t want to miss out on good opportunities, either.
Real.markets notes in their whitepaper that current real estate investment schemes are rife with inefficiencies, but the truth of the matter is that the same can be said for many blockchain designs and implementations. Nevertheless, no points off for trying to present yourself as the solution to the alleged problem.
Real estate does remain a great long-term investment, location dependent, of course. There are places you could have invested in 10 years ago for much more than you can buy or sell them for today. It’s all relative, and a truly revolutionary product would work on cutting through the misinformation about things. According to a report from Forbes earlier in the year, the following are true of real estate:
Home prices will slowly rise.
Mortgage market will make ownership harder to attain, so those who already own will be better positioned.
Upcoming generations may have better credit opportunities.
A full-fledged, down-to-the-splinter-of-wood inspection of the property in question, with a copious amount of photographs to complement it, that would be the kind of thing the masses would flock to. Especially if that were only one feature of such a platform. When such a thing arises, we’ll certainly be interested in what its token might be able to do for us.
But let’s see what we’re offered in Real.markets.
Real Estate has been historically considered the best way to preserve wealth. However, Real Estate investments today present significant inefficiencies such as lack of efficiency and liquidity. […] REAL (Real Estate Asset Ledger) team is applying Blockchain technologies to the world of Real Estate investments in order to solve those issues. REAL is an Ethereum Smart-Contracts governed ecosystem that focuses on creating the best conditions for Real Estate investment eliminating costs due to unnecessary intermediaries, providing transparency and liquidity, alleviating tax inefficiencies and easing cross-border transactions under a unified crowdfunding platform.
REAL (Real Estate Asset Ledger) is a new Ethereum Smart-Contracts governed ecosystem that applies Blockchain technologies to the enormous Real Estate investment industry, giving greater access to global investment in Real Estate, lowering barriers to entry, and increasing market liquidity. […] It will offer an effective method of investing and securing the value of the existing +100 Billion USD equivalent in cryptocurrency into the less volatile and growing Real Estate market by generating rental income and value appreciation. […] REAL Founders have invested USD 350.000 in the company […]
So far it’s all still a bit too vague. It would seem sensible to stop reading the thing, if it were the author’s money. You should be able to tell me what you want to do with my money within the first couple of sentences. Just tell me what you want, and what I get, and we can play ball. If we agree there is a problem, let’s solve it together. We’ll both profit. But this is not how many ICOs are approaching business. Instead, things must be a bit confusing.
Several pages pass. We still don’t know what we’re actually getting into. Just “blockchain applied to real estate.” On page 5, we get the meat of the thing, and probably the main problem.
On our Crowdfunding site, users will be able to exchange REAL Tokens for economic rights of a property and will be backed by physical Real Estate. Our users will also be able to trade their investments at our platform, turning Real Estate investments into liquid investments.
Full stop, we can see a problem with this. You’re just some people with a tech company. You’re not a government with guns you can use to enforce anything at all. Even if you have wizardry in the technical sense, you’re going to need banks on board.
That’s going to take time and money. “Rights enforcement” is a red herring like no other. It’s not something the author wants his money in, nor does he think many want to try their hand at that. In fact, it’s probably not something private entities should overtly try playing around with at this point in time. It relies on government acquiescence to essentially non-regulated markets, and agreement to enforce rights contracts drawn up on the same.
On page 6, we learn that:
REAL will earn a 10% commission fee on all income or value appreciation profits from investments made through the platform. For example, if a property participation generates 100 ETH in profits, REAL platform will keep 10 ETH and pay 90 ETH to the investor.
One has to wonder if existing real estate investment firms, which have none of the problems of actual enforcement that REAL will face, cannot simply do better than 10%. People are free to invest their dividends into cryptocurrency if they want to, after all. It may be that this product is too early, or just not serious enough to get the job done. One way or another, this whole risk of “rights enforcement” is just too large to give a pass. One cannot simply overlook such a thing.
REAL Token
Hard to believe at this stage of the ICO boom we’re being presented with such low quality offerings, but here we are:
Real Tokens are a digital representation of a participation entry ticket for our crowdfunding site. They are divisible until 0.000000000000000001 REAL (1/1.000.000.000.000.000.000 REAL). Real Tokens are minted via a Token Sale Smart Contract and can be held in any Ethereum ERC20 compatible Wallet.
The old “spread the risk among millions and millions of people are just a little exposed” idea. The one that tanked the global economy by putting toxic assets in with okay assets. From a traditional perspective, literally nothing that could be offered on Real.markets will actually be far from toxic. When not toxic, they still carry an element of danger. If you need a real estate play in the cryptosphere, Rex at least has the rational idea of disrupting the listings racket. That is something that doesn’t interfere with the government’s ongoing dominance in various parts of people’s lives.
REAL Tokens will be tradable outside REAL platform, as they are an ERC20 Token so they will have an inherent value in the exchanges. Users will also be able to use REAL Tokens for acquiring real estate economic participations at our crowdfunding platform.
This author has never seen a weaker value proposition. We don’t even need to look at their “stellar team” to know this is a load of bad investment in ICO clothing.
REAL Verdict
Nope, nope, nope. Checks all the boxes for ill-prepared, ill-informed, and likely to fail. “Inherent value” at exchanges? Indeed, of precisely next to nothing. If people are going to begin using platforms to swap property, one suspects that some of the old school big boys will get in on the action and simply blockchain their current business. There are plenty of Wall Street firms thirsty, looking at the cryptocurrency boom with envy.
We recommend serious caution for any ICO that proports to “enforce rights.” Make no mistake, if rights are enforced, it is done by the government. And cryptocurrencies are simply not suited for the functions of government, at present time, although by design they can eventually be so.
Risk
Scammer’s paradise. -4
Questionable token value, massive supply. -4
Growth Potential
Disruption of property will be big. +3
Hype around this ICO is huge. +3
Despite their disconnect with the reality of “rights enforcement,” the team seem to have done a good job building significant momentum. +3
They are running their ICO through Bitcoin Suisse and have contracted with some significant advisors. While this does not inspire extreme confidence in the actual idea, it does mean that the token is a bit better for speculating on. +2
Disposition
We are giving Real.markets a 4.0 based on our current outlook on such tokenization schemes. We believe they are ill-fated unless they find more interesting ways of “enforcing rights.” Until that is up front and obvious, we have to assess that these things are probably low-performers where both short and long-term where our readers could be earning real returns elsewhere. We will of course return to the matter when some of these tokenized asset ICOs have been on the market awhile, assessing the best performers at that point, if there are any, and modifying our ratings for the purpose.
Investment Details
Investment begins August 31st. Visit https://www.real.markets/ and follow directions carefully. Be sure to research “real.markets scam” around that time to avoid any scams that may arise, as well, and make all decisions for yourself.
Source (https://hacked.com/ico-analysis-real-markets/)
Author: P. H. Madore (http://phm.link)
P. H. Madore has covered the cryptocurrency beat over the course of hundreds of articles for Hacked's sister site, CryptoCoinsNews, as well as some of her competitors. He is a major contributing developer to the Woodcoin project, and has made technical contributions on a number of other cryptocurrency projects. In spare time, he recently began a more personalized, weekly newsletter at http://ico.phm.link