What is blockchain?
A blockchain is a distributed database that is shared among the nodes of a computer network. As a database, a blockchain stores information electronically in digital format. Blockchains are best known for their crucial role in cryptocurrency systems, such as Bitcoin, for maintaining a secure and decentralized record of transactions. The innovation with a blockchain is that it guarantees the fidelity and security of a record of data and generates trust without the need for a trusted third party.
How Does a Blockchain Work?
The goal of blockchain is to allow digital information to be recorded and distributed, but not edited. In this way, a blockchain is the foundation for immutable ledgers, or records of transactions that cannot be altered, deleted, or destroyed. This is why blockchains are also known as a distributed ledger technology (DLT).
- The first blockchain was conceptualized by a person (or group of people) known as Satoshi Nakamoto in 2008. fue conceptualizado por una persona (o grupo de personas) conocida como Satoshi Nakamoto en 2008
- In the field of cryptocurrencies, the blockchain is used as a non-modifiable notary public of the entire transaction system in order to avoid the problem that a coin can be spent twice. For example, it is used in Bitcoin, Ethereum, Dogecoin and Litecoin, although each one with its particularities.
- It is used as the basis of decentralized platforms that allow the creation of smart contract agreements between peers. The goal of these platforms is to allow a network of peers to manage their own user-created smart contracts. A contract is first written using code and uploaded to the blockchain using a transaction. Once in the blockchain, the contract has an address from which it can be interacted with. Examples of this type of platform are Ethereum and Ripple.
Is Blockchain Secure?
Blockchain technology achieves decentralized security and trust in several ways. To begin with, new blocks are always stored linearly and chronologically. That is, they are always added to the “end” of the blockchain. After a block has been added to the end of the blockchain, it is extremely difficult to go back and alter the contents of the block unless a majority of the network has reached a consensus to do so.
What is an NFT?
Non-fungible tokens (NFTs) are cryptographic assets on a blockchain with unique identification codes and metadata that distinguish them from each other. Unlike cryptocurrencies, they cannot be traded or exchanged at equivalency. This differs from fungible tokens like cryptocurrencies, which are identical to each other and, therefore, can serve as a medium for commercial transactions.
Why Are Non-Fungible Tokens Important?
Non-fungible tokens are an evolution of the relatively simple concept of cryptocurrencies. Modern finance systems consist of sophisticated trading and loan systems for different asset types, ranging from real estate to lending contracts to artwork. By enabling digital representations of physical assets, NFTs are a step forward in the reinvention of this infrastructure.
To be sure, the idea of digital representations of physical assets is not novel nor is the use of unique identification. However, when these concepts are combined with the benefits of a tamper-resistant blockchain of smart contracts, they become a potent force for change.
Benefits of real estate tokenization
Tokenization has the capacity to radically transform the global real estate market. It offers both issuers and investors a wealth of substantial advantages over the existing investment options, as well as opening up opportunities for a bigger number of investors to enter the market. Below we’ll consider some of the biggest gains that tokenization is bringing to real estate.
Better liquidity
Liquidity is seen as one of the chief advantages of tokenization, as it has the flexibility to achieve additional value that illiquid assets lack. Besides, fractional ownership can contribute enormously to increased revenue in the commercial real estate segment. This can result in billions or even trillions of dollars of equity investment.
Lower entry cost
A security token doesn’t need to be sold as a whole unit. As a result of fractionalization, the code that underpins the token makes it possible to divide it, thus allowing the issuer or holder to sell these fractional tokens at a lower price. Consequently, smaller investors will have a chance to take part in the investment market. Meanwhile, wealthier investors will be given more opportunities for diversification.
Standardization of transactions via smart contracts
The tokenization process heavily relies on blockchain technology. This in turn allows for both the purchase and sale of real estate security tokens via standardized smart contracts. The key advantage of smart contracts is that they don’t have to be individually negotiated. Their terms can be implemented automatically, which considerably reduces transaction costs and the time needed to carry out the procedure.
Greater transparency
Blockchain is capable of recording each and every transaction that takes place on it. Whenever a single token undergoes a transaction, all the participants become aware of it. Therefore, investors can look at the token’s history, pricing, as well as other transaction details at any time.
Top security
Given that blockchain is a distributed ledger, no person or organization can control it and impose their own policies. What’s more, the distributed ledger technology (DLT) uses advanced cryptography techniques that provide users with heightened security. Each user has their own private key that gives them access to their blockchain assets. This key is generally represented as a line of random characters (both letters and numbers), which makes it extremely difficult, or even impossible, for outsiders to guess it.
Immutable nature
The most notable feature of blockchain is that after a transaction has been recorded and confirmed, it doesn’t allow anyone to make any changes and alter the transaction details. This proves extremely useful when investors want to make sure that no one has falsified the information about the transaction.
What is a DAO?
DAOs are an effective and safe way to work with like-minded folks around the globe.
Think of them like an internet-native business that's collectively owned and managed by its members. They have built-in treasuries that no one has the authority to access without the approval of the group. Decisions are governed by proposals and voting to ensure everyone in the organization has a voice.
There's no CEO who can authorize spending based on their own whims and no chance of a dodgy CFO manipulating the books. Everything is out in the open and the rules around spending are baked into the DAO via its code.
Why do we need DAOs?
Starting an organization with someone that involves funding and money requires a lot of trust in the people you're working with. But it’s hard to trust someone you’ve only ever interacted with on the internet. With DAOs you don’t need to trust anyone else in the group, just the DAO’s code, which is 100% transparent and verifiable by anyone.
This opens up so many new opportunities for global collaboration and coordination.
How do DAOs work?
The backbone of a DAO is its smart contract. The contract defines the rules of the organization and holds the group's treasury. Once the contract is live on Ethereum, no one can change the rules except by a vote. If anyone tries to do something that's not covered by the rules and logic in the code, it will fail. And because the treasury is defined by the smart contract too that means no one can spend the money without the group's approval either. This means that DAOs don't need a central authority. Instead the group makes decisions collectively and payments are authorized automatically when votes pass.
Standardization of transactions via smart contracts
The tokenization process heavily relies on blockchain technology. This in turn allows for both the purchase and sale of real estate security tokens via standardized smart contracts. The key advantage of smart contracts is that they don’t have to be individually negotiated. Their terms can be implemented automatically, which considerably reduces transaction costs and the time needed to carry out the procedure.
Greater transparency
Blockchain is capable of recording each and every transaction that takes place on it. Whenever a single token undergoes a transaction, all the participants become aware of it. Therefore, investors can look at the token’s history, pricing, as well as other transaction details at any time.
Top security
Given that blockchain is a distributed ledger, no person or organization can control it and impose their own policies. What’s more, the distributed ledger technology (DLT) uses advanced cryptography techniques that provide users with heightened security. Each user has their own private key that gives them access to their blockchain assets. This key is generally represented as a line of random characters (both letters and numbers), which makes it extremely difficult, or even impossible, for outsiders to guess it.
Immutable nature
The most notable feature of blockchain is that after a transaction has been recorded and confirmed, it doesn’t allow anyone to make any changes and alter the transaction details. This proves extremely useful when investors want to make sure that no one has falsified the information about the transaction.