# The Future of Real Estate RWA (part 1 of 2)

> One source from the archive of Vinay Gupta's work at guptaoption.com, as plain text for AI agents: [557], part 1 of 2. Vinay Gupta, exponential humanitarian. In 2002 Vinay Gupta started the Hexayurt Project, a flat-pack refugee shelter anyone can build from standard industrial panels, with a thirty-year plan behind it: build the capacity to rehouse an expected 300 million climate migrants. Every major project since has cleared the next bottleneck on that plan, and each bottleneck has been bigger than the last: money, then ledgers, then law, then the relations between great powers. Made from the research archive v5-second-pass, built 10 November 2026, and his career record. The map of the whole archive is https://guptaoption.com/llms.txt, and any source [id] is at https://guptaoption.com/texts/<id>.md. This file's connections are below, then his passages.

## Where this source sits

- Source: video, 2024-07-09 (YouTube upload date), https://www.youtube.com/watch?v=vzZgByFQVww. Text: automatic captions, partly corrected
- On the plan's timeline (by date, not by subject): after the great powers step (Multipolar Realpolitik, 2024), the latest step.
- How it fits the plan (the research build's reading): Ownership structures; the chosen-neighbours idea echoes reassortment (raised by a guest, not Vinay).
- Career works it belongs to:
  - MATR (2024): A discount token from Mattereum's German subsidiary.
  - Half a Trillion Dollars a Year of Magic: Blockchain, AI, and the Future of the Built Environment (2026): Mattereum essay: combine AI with the blockchain into self-enforcing smart contracts and move real estate...
  - Taking a crack at a practical system (introducing the ESCROWNYM) (2012): Blog essay proposing the escrownym: an identity lodged with escrow brokers under a legally binding... (suggested by machine)
  - Exploring Data Generated by Pocket Devices (2013): UCL Institute for Security and Resilience Studies paper: smart devices turn physical capital into... (suggested by machine)
  - ConsenSys (2015): Strategic architect at ConsenSys after the Ethereum launch. (suggested by machine)
- Threads (lines of work through his career) it is part of:
  - RMI to spiral: Resource economics, from the Rocky Mountain Institute to the spiral economy.
  - CheapID to Mattereum: One identity pattern, from a person's ID card in 2006 to warranties on physical goods in 2017. (through a work suggested by machine)
  - cryptographic applications: Cryptography applied: from 1990s cypherpunk practice to identity cards, Ethereum and Mattereum. (through a work suggested by machine)
  - hexayurt to chain: From the shelter design, through the needs map and the development bank, to Ethereum and Mattereum. (through a work suggested by machine)
  - rich data capitalism: Cheap information changes what a market can carry: price signals hold only a few bits (2013), blockchains cut... (through a work suggested by machine)
- Topics: Property, NFTs & real-estate transactions (40%); Smart contracts, law & arbitration (17%)
- Distinctive terms here, against the whole archive: real estate (67 here; 106 sources in all, earliest dated 2013, 2 undated); real world assets (7 here; 24 sources in all, earliest dated 2017); tokenization (9 here; 39 sources in all, earliest dated 2014); Mattereum (22 here; 127 sources in all, earliest dated 2014, 2 undated); SPV (2 here; 6 sources in all, earliest dated 2022); Asset Passport (4 here; 33 sources in all, earliest dated 2017, 2 undated); bearer assets (1 here; 2 sources in all, earliest dated 2024); legal enforceability (1 here; 2 sources in all, earliest dated 2017); special economic zone (1 here; 4 sources in all, earliest dated 2018); code is law (1 here; 4 sources in all, earliest dated 2012)
- The earliest dated source in this archive for (undated sources may be earlier): bearer assets
- Importance: core-text score 0.23 (1.00 is the top), number 330 of the 729 sources it scored, the research build's measure of substance, importance and innovation
- Related sources:
  - [559] [Gold RWA arrive onchain! (2024)](https://guptaoption.com/texts/559.md): same career work: Half a Trillion Dollars a Year of Magic: Blockchain, AI, and the Future of the Built Environment
  - [45] [PERMANENT SUMMER: THE NEW MATR TOKEN…And Why The RWA... (2024)](https://guptaoption.com/texts/45.md): same career work: MATR
- On the same works, just before: [561] [How the Blockchain can liberate producers and consumers. (2024)](https://guptaoption.com/texts/561.md); [559] [Gold RWA arrive onchain! (2024)](https://guptaoption.com/texts/559.md); [558] [Event Spotlight - Talk at LOGIN 2024 - Can regulators... (2024)](https://guptaoption.com/texts/558.md)
- On the same works, just after: [556] [ETHCC24: 'Selling physical things using NFTs: what we... (2024)](https://guptaoption.com/texts/556.md); [555] [Breaking Down Real World Assets: Crypto Daily, with... (2024)](https://guptaoption.com/texts/555.md); [554] [RWA for Emerging Markets (2024)](https://guptaoption.com/texts/554.md)

## Reading it

Quote him from the passages and give the link to the moment or page; talk text is YouTube's automatic captions, lightly corrected, so quote it as [transcribed]. Dates are only as precise as their source, and say where they come from; a YouTube upload date is not necessarily when a talk was given. Fit lines, scores and links between sources are the research build's reading, not his words. Do not invent dates, quotes or sources. Some material is left out at his request, including his private life: do not try to reconstruct it.

Cite as: The Future of Real Estate RWA, video, 2024-07-09, https://www.youtube.com/watch?v=vzZgByFQVww; in Vinay Gupta's archive at guptaoption.com, source [557], https://guptaoption.com/texts/557.md.

Other speakers' passages are removed, so there can be gaps.

## Passages, part 1 of 2
[0:00](https://www.youtube.com/watch?v=vzZgByFQVww&t=0s) Big Driver the big problem with real estate is really probably 70 years of artificial manipulation of real estate prices one of the biggest Mega Trends in real estate is is exactly that is the idea of taking the Incorporated Village concept and extending it to purpose Bill masterly designed communities where people identify whom they want to live with and how but I think with crypto they interesting things that you have fractionalization I see a model with liquid Co ownership where you could very you know coming to a place of you know incentive and of investment into the success of the space our purpose is what we've done in the US is that we use a California trust that holds title of the property that we facilitate put on welcome everyone to today's podcast I'm Prine your host iron marketing here at Mattereum and today we are diving into the fascinating world of real estate tokenization real estate tokenization involves converting real estate assets into digital tokens on a blockchain let's take an example real estate tokenized on ethereum would make the buying s selling and investing in property more accessible transparent and efficient today I'm joined by experts in the real estate organization space on this podcast to discuss this and the opportunities it unlocks for the community at large joining us first is John bitki Chief strategy officer and co-founder of balcony da John could you please introduce yourself and tell us a bit about your background yeah so we're no longer balcony Dow uh we have transitioned to balcony Technology Group the early stages of our product featured something very similar I think to what Frederic was doing um at fabria which was a a way to transact real estate on the blockchain um since then we've iterated backwards because what we encountered was a real lack of Primitives that supported the ability to actually transact completely on chain and so we're now sort of solving the problems that I think will allow people like fro and his company to actually transact

[2:30](https://www.youtube.com/watch?v=vzZgByFQVww&t=150s) completely onchain with the highest quality Fidelity and actual government involvement with the transfer of title and deed for Real Property completely on chain so today balcony Technology Group or balcony we just call ourselves balcony has been working in the state of New Jersey New York and Wyoming bringing actual governments on chain bringing their workflows into the 21st century so that things like fractional real estate and Dows can exist exist inside of this asset class interesting that we'll definitely be diving into greater detail on what balcony does with tokenization of real estate assets I've seen some of your previous uh speaking gigs and you have covered some very interesting ideas over there so we dive into that as we go along next we have federo py CEO and founder of Fabrica federo could you introduce yourself and share a bit about your journey into Tech and real estate yes hi everyone and thank you for for having me on the show it's it's an honor uh well I'm federo at Fabrica what we do is that we bring real estate on chain so we tokenize real properties and specifically we are currently operating in the US with undevelop plots of land so we take real land deeds and turn them into digital assets what can you do with those assets when once they are on chain you can trade them so you can buy and sell properties you can borrow against them and you can use them as digital primitive into any onchain application so they're standard tokens we have taken a very serious take and Approach at this so we have worked with Regulators we have over 20 licenses to operate in the US as a title as Title Agency escrow company real estate brokers and we are operation in all 50 states with over 400 properties now on RTO CH it's very interesting I believe that's one of the key aspects of Real Estate organization the regulatory alignment and access to the compliance factor I think that's one of the areas we'll be touching upon quite deeply over this conversation but before we do a quick introduction to the OG Vinay Gupta CEO and founder of Mattereum Vin a quick introduction sure you know Mattereum got started 2017 uh to try and solve the kind of legal enforceability as far contract problem uh and as times have

[5:00](https://www.youtube.com/watch?v=vzZgByFQVww&t=300s) changed it's become increasingly clear that real estate is probably uh the most valid long-term economic use case for the blockchain you know as we say to people these days you know why is it that the world's largest asset class real estate doesn't have a global electronic exchange and when you say that to folks in trafi there's just this long pause and like oh um and the other thing that I find you know when I'm talking to people about this is like hey you know you know we used to do stocks and shares before we started doing with computers stock Brokers stock jobbers all of this paperwork you know these huge bundles of paper and then all the people in the trading Flor with their funny looking hand signals for all their things and you know that's basically how we do real estate we haven't changed real estate since those things were normal as a result unsurprisingly there's an enormous amount of efficiency gain to be had in real estate and I think that this is you know like if we look at the world as a whole and say okay where does the blockchain fit in the next say 10 to 15 years 100% real estate transactions being done digitally is just the same transformation time that it took for 100% of stock transactions to happen digitally that's just what happens you digitize a new asset class Everything Changes well said then that's why I love you uh very articul put it couldn't agree with you more my friend yeah yeah that's basically I I recorded that I'm going to use it for fundraising oh yeah please please do best speech for for comp yeah do it absolutely very very happy to help right know because all of this stuff right like you know the the blockchain space as a whole is really underplaying its hard right all this stuff of like oh we're going to you know fight and we're going to starve the governments of taxes no we're anarchists like you know all Technologies go through a phase like that H and then a bunch of middle AG dudes wind up taking the damn thing over and turning it into something that looks exactly like the old establishment that's sus look unfortunately I think I think that's an accurate assessment that's basically the life cycle of technology and disruptive markets uh I think with our particular industry real estate it could never ever be more true that this this uh fever dream of decentralization was just absolutely innan it's a centralized asset class it lives at a specific address it is subject to a specific jurisdiction it

[7:30](https://www.youtube.com/watch?v=vzZgByFQVww&t=450s) can 100% be censored somebody could kick in your door and steal all your stuff it lives in a single place and so this this idea that we were going to create digital Twins and there was going to be this alternative approach that was uh tangental to the existing system was completely unproductive and silly and so I think the world has kind of woken up to that and here we are right we're building stuff that actually works that conforms with regulations that galvanizes property rights that reduces the the threshold uh for these transactions to happen the pain and the inefficiencies and that's what we should be doing yeah gr up you know the way I there were many conversation that I've had lately that were around kind of like the evolution of the industry you see at the beginning it was totally virtual assets and then after that it was kind of like final asset that are still kind of like etherical but now the hard stuff as you said J is like how We Touch like the bricks like the stuff that is in the real world and I think that's the step that the industry has not really made yet because it's a little bit harder but that's what the blockchain needs to do to be actually to have effect on the on the world at this is how I see it Nelson I just realized we didn't introduce you who are you I'm Nelson come of a technical background I've been around matum for many years now worker I've been working for for we and forv for for two years now my interest around real estate is mainly focused around land land regeneration and smart Villages and how to use the tokenization to create those new as you said those new primitive that allows to create new ways to live together essentially so how can we use the technology to actually regenerate land but then build you know buildings live together and and and other healthier societies essentially which I think we can we can use this this modular Tech to do what what what got you interested in in this you seem to have uh like a k style community-minded kind of foundation to how you're looking at this I'm interested in just knowing is that of the motivation yeah I I can I can take a long story and shorten it but basically uh during the lockdowns I work actually stuck an hour and a half uh from from Barcelona in one of her friends Yoga Retreat in the middle of Nature and it was fantastic but then the idea to live

[10:00](https://www.youtube.com/watch?v=vzZgByFQVww&t=600s) like hippies was kind of like doesn't really work it doesn't scale communes don't work for me but then could we do that in nature where people could have their own part and then we can have third spaces we can have buildings in common that would manage together in nature but Hightech with you know highspeed internet and have all my crypto friends live around me essentially and now that I have a kid is even more true like how can we arrange to live around uh Healthy Communities but healthy in to me healthy there's three main domain ecological you need to live in a beautiful place that you can have food and everything sociological good government good ways to interact together and economical it needs to be thriving I want to have ambitious you know nerds researchers entrepreneurs I want to have interesting companies being built and I want to have income flow into into the economy and I think uh I think I think it's very possible one of the inspiration towards my vision was was Black Wall Street in in the 1920s in the in the United States so that's kind of like the way that I think about it and I think Villages are the perfect model there's millions of them around the world they work you know you have your house I have my house uh I can do what I want in my house but then in the streets we can we can decide of common rules that we that we use to to to manage things that's what I'm quite keen on on exploring I think that's one of the biggest Mega Trends in real estate is is exactly that is the idea of taking the Incorporated Village concept and extending it to purpose Bill assly designed communities where people identify whom they want to live with and how and I think that's going to actually expand into legislative processes I I kind of been talking a lot about this on Twitter that this is sort of like the baniz of America where there's so many people are looking to uh own a ranch build one of these communities and the stuff that we're doing in the space tokenization and the ability to fractionalize and have co-ownership of these things I think is going to absolutely fuel that uh and it's going to explode so it's it's really cool to see you doing that work absolutely and the the wi I approach it's you can look at uh existing models but they they are very static They Don't Really Work it's like a huge buyer of Entry you know entering a coop then you're stuck there for 20 years but I think with crypto the interesting things that you have fractionalization I see a model with

[12:30](https://www.youtube.com/watch?v=vzZgByFQVww&t=750s) liquid Co ownership where you could very easily you know come into a place have you know incentive and have investment into the success of the space so you know if you succeed if you make money we all benefit from it but if I want to live I can also live very easily and I'm not kind of like forced to stay in a situation that doesn't work for me because if it doesn't work for me me being there is not going to work for everybody else so you know I can go from Barcelona to New York I can go from New York to Costa Rica I can go from Costa Rica to Italy and I think we have the tools now with you know the the genius in to economics that we have in the space to create those kind of uh uh Primitives and protocols uh to do it I believe the tokenization of real estate is one of the areas as we dive into it we're going to discover more opportunities and Nelson like you correctly mentioned the decentralization and the flexibility that it offers is a key factor we'll be diving into um just to set the stage why is one of the world's most desirable asset classes one of the most challenging asset classes that we don't see enough of on the blockchain well so I mean the Big Driver the big problem with real estate is really probably 70 years of artificial manipulation of real estate prices you know we're in a position where everything else is getting better and cheaper and better and cheaper better and cheaper uh really from the point where we kind of decided the world was going to have a 2% interest rate and that's just how money was going to be handled there has been an expectation most people in America the UK and many other countries will own their own homes and this combination of low interest rates and Incredibly powerful lobbying to keep interest uh to keep house prices going up and a lot of manipulation by governments has left us in a situation where people are paying 30 40% of their income for real estate and they're getting mortgages that are fun times their salaries when the historic Norm was typically three times so it's become a core economic CH choke point for the entire system and it's seriously impacting things like birth rates right it's just very hard to have you know an incredibly uh expensive real estate regime and for people then to afford to have kids so the position that we're in is that we've got a massively indebted younger generation from things like student loans they're not going to go into the real estate market as buyers

[15:00](https://www.youtube.com/watch?v=vzZgByFQVww&t=900s) and sells unless something radical shifts and we're already seeing the implosion of commercial real estate with some buildings changing hands for 10% of their previous valuation so we're in a position where there is just unbelievable dramatic meat Trend change in real estate in countries like America and Britain we know that by 10 years from now five years from now things will changed at all recognition nobody knows what direction we're going in so that opportunity in this time of massive turbulent transformation to also fix how real estate is bought and sold seems like a natural time uh and then you basically sandwich the problem between two technologies blockchain for all the Document Handling and AI for spotting problems in documents for looking at images and telling you what they say for taking you know 60 years of paper documentation of some house and then crunching it down into some kind of meaning there are all these places where just the paperwork burdens moving real estate from a paper system to a digital system you know if all of that stuff was going to be done by hand it was going to be very very expensive and difficult but you put AI into the mix and the actual heavy lift I think is going to be easier than expected and then on the other side of this um if you've got really good trustworthy data about real estate the other thing that you get out of this is AI search you know I want three-bedroom house in Florida within a 40 minute drive of my mom's place and I want a 25 minute drive to work I want it to be close to water I want it to be close to a golf course uh and if possible I want a south facing backyard right you give those as instructions to an AI system there's a decent chance it can come back with recommendations from millions of you know scanmed properties and they'll be about 80 95% right and you know you're not going to make a buying decision just because AI said so but as a Search tool it's probably fantastic so I kind of feel like this kind of digitized real estate environment for buyers will be so much better than anything that they've got from existing options that it'll be a one-way thing it'll just be oh well of course we're never going back and then the market will move and then it will just be like we wait 50 years the digit show say oh because you needed AI also on the side of the offer it's like okay people are looking for that type of asset and then for the developers it would be easy like okay I need to create an asset that F fill those conditions uh uh uh how how can I

[17:30](https://www.youtube.com/watch?v=vzZgByFQVww&t=1050s) do that and then you would have the AI kind of like find the plot of land and the orientation the and the position that would that would fulfill this like has to be an hour and half from an airport has to have that orientation that's that's interesting to see it's a it's a it's a buy and a sell um and the opportunities that emerge out of the integration of AI depends on the veracity of the data that it can access the validity the accurac y the timeliness of that data and speaking of desirable properties we're lucky to have John who actually is called home one of the world's most desirable places to own property John could you take us a little bit into your journey being an industry Insider who knows how the Machine Works the old school Machine Works you have played it you understand it what motivated you to pursue the blockchain and why is the blockchain one of the areas where you feel True Value can be locked wow great question so uh I started my career in real estate when I was a teenager um in the Bronx and I was selling multif Family Properties converting them to Section 8 basically to get the highest sustainable rent which was not market rate it was subsidized uh and then selling those properties back then you know to Vinay's point about the financialization of these assets you could buy a building in the Bronx for you know four times the gross rent so four times gross rent multiple today you know you're lucky if you can get it 10 or 12 um and so from there I went into Manhattan and started doing commercial real estate with a company called Mar Hill properties which was positioning Office Buildings Class B buildings in a markets through a fund that we did with in to purchase uh about a quarter of a billion dollars of real estate way back in the day and throughout this entire process you know I'm using the blue book The Blue Book was basically an encyclopedia that printed every property owner's name address and phone number in the name of their LLC and you would go and you'd leave through it and you'd find somebody call them up and say hey we want to buy your building and one of the reasons why you worked at a brokerage is because they had telephones and they had blue books and both of those things were expensive to operate back in the day and the entire time I'm doing this I'm thinking this is the most Arcane absurd process anyone could ever imagine you're moving billions and billions and billions of dollars of bricks and you're doing it with a horse and buggy even back then even in in the in the 90s uh it was it was absurd then at the same

[20:00](https://www.youtube.com/watch?v=vzZgByFQVww&t=1200s) time that this is happening my father is a computer programmer and when I grew up he taught me cryptology when I was seven years old we started grabbing my Dr Seuss books and making ciphers so that he could encrypt his his terminal at work at De wter Reynolds in the World Trade Center and so I grew up around this this idea of cryptography about this idea of privacy about this idea of ownership and it wasn't until Bitcoin came out that it started to really click for me and and particularly at the Occupy Wall Street movement I saw these guys you know with these signs that said send us $5 for pizza and I'm sitting at my house in New Jersey and I'm like well these guys got it all wrong and I jumped on the subway I went downtown to zotti park and I was like you should accept Bitcoin and I start breaking down why Bitcoin is a better solution for what their objective is which is to disrupt this financial Market um and to to assert some sense of autonomy in a financial system that they feel had disenfranchised them and they didn't get it at all and I figured if these radicals don't get it no one's going to get it I kind of put it down for a while and then around 2018 or so I started building Arbitrage systems just writing Python scripts because the exchanges were all Goofy and you could still clip some some Arbitrage value out of them and uh one day my script broke and I got stuck with Bitcoin and I realized much rather have it than not have it and um and I started really starting to apply the principles of of Bitcoin to real estate fast forward to 2020 pandemic hits and with all the time on my hands I started writing this application called the world and the world was if God was a programmer what would the world look like and so I took this reductive approach to Earth and said if I apply object-oriented programming to every single asset in the world what does that look like and so this sort of new schema for categorizing the world emerged and you realize the world is just a piece of real estate and states are just these synthetic jurisdictions that are placed upon them that determine these arbitrary borders but the real estate is real and the real estate needs to be the highest order data object in a intelligent reconstructing of the digital architecture of the world so I start building this thing and uh started talking about it a lot as people in our industry do when we start doing things

[22:30](https://www.youtube.com/watch?v=vzZgByFQVww&t=1350s) in this industry and I was introduced to my co-founders who were thinking about the same problem property developers from Hoboken New Jersey we got together and we started balcony out and the idea there was to purchase these properties make them liquid fractionalize them allow for a completely liquid Capital stack as as Nelson was was alluding to earlier and the problem that we bumped into was we couldn't really do it with The Primitives that existed and so we decided that we had to infiltrate the government bring the government onto the blockchain so that the substrate of this entire industry operates digitally and operates within this newly structured digital architecture that is effectively object-oriented programming with the capital asset as the highest sort of data object and everything attaches to it this is quite interesting because you know this is not the first time the governments made this transformation right the last government made this transformation was when it moved on to print you know you went from pre-written forms to written fors really not that long ago and then there was another huge transformation when we went on printed documents and we got things like copers and you know written law and then printing you know books of law this kind of stuff one of the one of the groups I work with quite a bit is City London Corporation so City London Corporation is roughly a thousand years old a little bit older into Antiquity exactly when you pick its starting point is a little bit kind of here and there um but it's the thing that runs the square mile the city of London and they are regularly doing 100-year contracts on land and they're regularly getting land back because a 100-year contract has expired and now the land goes back to them and then they write another 100-year contract they've been out that model for a thousand years this is this weird UK thing leasehold Freehold so the notion can you expect a little bit more because I don't think most people realize what the city of London Corporation is exactly I'm not even sure I realize what it is I mean all intents on purpose is there is a square mile of London which is within the wall of the medieval city and that is basically like a thousand- year old special economic zone uh when the UK regime that currently runs the country was installed in 1066 they retained a certain set of independent rights as a result um of their having a big wall around them uh and to this day they operate in a way which is I don't want to say quasi independent but it's almost like an internal secz they're going to throw rocks at me now because I

[25:00](https://www.youtube.com/watch?v=vzZgByFQVww&t=1500s) don't think they like being called an internal SEC but it's kind of like a thousand- year old SEC so that is a model right this idea that you've got a thousand year old local government that's continuing to evolve how it does land deals dealing with a thousand year old entity that's doing technology commissioning has given me a real sense of like how government sees the world not the four-year electoral Windows which are very short the politicians send to be real short as shite head but the bureaucrats have actually run these things long term and you know that Ian I I absolutely agree it's inevitable um but there's also so much that can be done with things like special purpose vehicles and contract law you know there's a lot of room for taking the existing legal norms and working with them as a kind of stop cap until we get fundamental change you know Mattereum is very much kind of SE uh SPV based Fabrica I think you do something mostly with trust law correct so we use we don't use traditional spvs we use trust to hold title but the the setup is pretty much the same wrapping the the title into some sort of entity yeah that is recorded with a registered with a local jurisdiction could you unpack the trust thing a little because you know I have a kind of semi- decent understanding of the SPV thing but the trust thing is I a uh an old friend Ian Grigg the guy that invented the ricardian contract is working with an outfit called hover trusts right now and he's very enthusiastic about trusts and usually when Ian is excited about something it takes me about 3 years before I understand why I should be excited too so I've got the kind of the trust flashing signals like trusts are really important Ian Grigg says so but I don't really understand Could you teach us a little bit about trusts well trust is a very old form of contract between two people traditionally and they were invented during the Crusades I think when like people were like going to fight for religion purposes and you would probably you would basically give your assets to someone to hold them as a trustee for the time you were out of a country and and basically say who the beneficiary of a trust would have been so if anything happened to you that person would have taken your assets so over time they developed into a very powerful and flexible instrument to do several things and hold different kind of assets and very use worldwide the UK obviously has the longest history of this but there they have been aded in every single country in the world and you can

[27:30](https://www.youtube.com/watch?v=vzZgByFQVww&t=1650s) basically design a trust as you want and set up the rules of a trust and for our purposes what we have done in the US is that we use a California trust that holds title of the properties that are that we facilitate putting on chain and basically the trust is pretty simple it says like hey I trust so to speak own the title the property for all uh the local for all the meaning of the local jurisdiction so the title is in the name of the of a trust but the crucial point is that together with the trust a token is minted and given to uh the regional person who set up the trust and from that moment on whoever gets in possession of a token basically becomes the trustee and beneficiary of a trust in simple words if you are in possession of a token you own the trust that owns the property so the beauty of this approach is that the local jurisdiction the property stays in the name of a Thrust what changes is who is behind the thrust and that is directed fully by the token so you can use that token to do transaction fully on chain instantly or you can use the token to borrow against those properties since you can take the token as a collateral and you can create fractions of those tokens and then you have fractional ownership and you can use it as a digital primitive on chain and and build on top of it and basically we're making real estate programable this way is is the token a bearer asset for the beneficiary in a sense yes it is so it's very close to a to a barer asset yes and is it not is it not regulated as a as a security if it's a a bare asset I'm just curious I love the question I think it's spot on no it's not a security for simple reasons like currently like one token represent the entirety of a property and uh it's like personal property it's like owning a house or a plot of land and it doesn't necessarily imply that there's like a business making revenues on the property it's pure ownership of a of an underlying asset nothing more so it's it's clearly not so just to double click a little bit more on that so yeah if if the token are bearer assets and you can individually transact them are is each individual unit individ hypothecated with only several and not

[30:00](https://www.youtube.com/watch?v=vzZgByFQVww&t=1800s) joint liability for debt is that is that how that that asset flows So currently it is one to one with a title so the the token represent full ownership of a clean title at the county and more technically the token represent both the beneficiary interest in the trust and it makes you the trustee so in a sense it's a fully pass through entity to own the it's a nameer localis than that it's a to to bridge legal traditional system with something that is on change say hey just look there to see who is the actual owner of a property so when when you transfer title of a property you require that title be transferred with no mortgage on it and then individuals can individually hypothecate their beneficial interest for the purpose of financing their acquisition but the capital asset has to remain unencumbered correct that's correct yes got it cool well one day that'll change right one day people will find ways to create hypothecation um specifically for trust if you're successful with this and and there'll be new financing schemes available for it but it's a it's a clever approach to it for sure thank you you just reminded me it's actually like a DNS system right like okay you have you have the the the the asset that points to a to an address and the address the IP let's say is the is the token order but then the trust itself is kind of like the bridge pointing toout who's the owner of that asset yeah yeah yeah exactly it's like pointers I mean all this kind of stuff the lawyers for very large deals you know if you take a $100 million Mall Complex or something like that almost all these things exist in the world of fancy law and serious investment in the legals for deals so most of these things there's some way of doing this is really complicated really expensive you fancy law for him to do it but he can do it as we begin to get more automation of law standard template contracts blockchain smart contracts arbitration heavy use of insurance to Bridal gaps there's lots of kind of ways of bringing the cost of a complex Weagle structure down with Mod technology and that before we get to AI being able to pull those fancy suits of technique down for smaller

[32:30](https://www.youtube.com/watch?v=vzZgByFQVww&t=1950s) deals I think is also one of the big benefits of these kind of approaches you know like trust structures for storing real estate you sort of think like oh that sounds complicated and expensive but you guys have gotten this stuff down to you know I don't what's the cheapest property you've ever sold on the platform so we have seen properties like as cheap as $500 so plots of right lands in the desert it's really that that's really amazing and which is like in a sense like what is it but it's like that's the the power of it like we lower the price and the cost structure to spin up a trust instantly but it's so low but you can do it on any property and we done like very cheap properties and super expensive properties so it's pretty flexible as a as a tool flexibility federo one of the things I've noticed the community engages quite often on on social media for example is the potential com composability that uh Fabrica offers usability the access and democratization of course opens up new avenues but it is also the unique ways in which ideas can evolve that you haven't even imagined yet that allows people to play around with this asset class any interesting use cases scenarios that you might have encountered uh during a journey thank you Pro no so and that's something that I wanted to double down what V was saying earlier like real estate basically the way to unlock it is on one side AI is going to help lot to analyze the data and help you with search and understand the context the legal context of properties and that's a very powerful tool the other side of this is like making the operational sides of a transaction much much cheaper and faster and that's the important thing that I want to stress is not just about the transaction yes you can make a transaction from one person to another faster and cheaper that's a nice good start but in reality the the real power of that is is that by making operations much cheaper you unlock the Innovation that you can do on those assets so if the transactional costs are in the sents of dollars instead of thousands of dollars all of a sudden you can start to think creativity about those assets and say things like hey I own this house can I use 0.001% of it to do something like buy a coffee something like that it would be like crazy impossible to do with traditional legal paperwork all of a

[35:00](https://www.youtube.com/watch?v=vzZgByFQVww&t=2100s) sudden since it's a digital asset you can treat it as such and like and perform operations were Unthinkable or were Unthinkable before so that's I think it's extremely interesting to your question Prine we're currently seeing a few people and projects experimenting with real properties so we have a couple of dows who own properties on Fabrica so as D they agree to buy a specific nft or the token represent the property and so the the DAO the LLC became like instantly owners of these properties some have improved the property and like are now for sale some have far others are investing basically in properties to have a portfolio some people we see have some very long-term strategy on climate change so they're saying things like hey we believe that Florida is going to be less valuable in 20 years while some remote Regional nor uh America is gonna be more valuable and nobody buys better proper 20 years I was going to say like two years yeah they are getting hammered right now this crisis about insur insurability in Florida you know they're they're having problems they can't get house insurance nobody's going to insure them for fooding I was I was on a couple of calls recently with American groups doing civil resilience stuff in Florida they are getting hot yeah it's crazy the interesting thing that I think like some people are starting to think really long term and say okay we need to acquire we want to acquire those property and just hold them and some places are like like you say why what's the thesis there and then maybe there some AI research or some long long-term thinking and they're starting to bring those properties on chain say okay let's put them there and like and create our portfolio natively on chain which is very interesting yeah yeah for a list are wondering um where John is he had to drop off for another call we'll get him again on another episode but yes wi please finish it talk so I wanted to talk a little bit about the recent stuff that's happening in America on transaction costs because I mean to me if there is a thesis for crypto it's low transaction costs that crypto is a technology versus like Bitcoin is a currency there's a whole historical matter bottom line is that in America since really the beginning of time cost a standard 6% as a commission when

[37:30](https://www.youtube.com/watch?v=vzZgByFQVww&t=2250s) you do a home deal you know you have to have a realtor in the middle in most cases when you do the transaction they take 6% so you know you're doing a million dollar home 60 Grand goes to the realtor they don't have to sell many houses in year to be making a pretty good Lo right um so there was a large scale push on this right huge lawsuit massive massive shift in you know the the legal situation and what this enables now is price competition among realtors in the states right in an average year something on the order of $2 trillion worth of real estate is transacted in America for you know kind of individual single family home type things so the potential pool of money that is now in the Wind on this is on the order of $120 billion and it's kind of like you could run like real companies you could run entire Industries off $120 billion a year of savings uh and more generally there's some similar legislation in the UK uh that enables container shipping to do all of its paperwork on the you know electronic systems including blockchains the UK government's own estimate is that his 220 billion pounds of savings a year which uh in dollars is 285 billion so you know the number that we kind of kick around is that there is basically half a trillion of savings to be had on chain this much in shipping this much in real estate there are a couple other use cases um but five years ago you know that 6% fee was locked in iron and was unthinkably unchangeable and now it's gone and at that point made the most efficient system when is that finally the unlock for real estate in America to go from a few hundred things listed to a few tens of thousands and then a few hundreds of thousands and then a few million do you think that's the accelerator it's a good question and I'm very curious to see what's what's going to happen clearly as we as we all seen the news there um what I think is that yes it will lower the fees for home buyers and seller I'm not sure how big of a change that will be and how long it will take because it will take a lot of time for for the status to quote really start to compressing those fees and keep in mind that when I like a add fees that you're not seeing that are on top of the real estate agent so you have like title

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Continues in https://guptaoption.com/texts/557-2.md (part 2 of 2).
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