Proof, a Korean financial technology company run by American and European expats, has launched property investment opportunities whereby users can buy small stakes of ownership for less than $3.
While $3 won’t buy much of a property, Proof registers ownership records on thousands of computers via blockchain technology, giving buyers “proof” of ownership backed by legal agreements and property liens to protect investments.
Blockchain technology is revolutionizing the banking industry, from decentralised, digital currencies like Bitcoin to new, cryptographically secure investment platforms like Proof.
Proof creates ownership “tokens” on the blockchain for users to buy, by entering into agreements with property developers and institutional investors. From there, they extensively audit the companies, or token issuers, and have independent appraisers determine fair valuations at which to set initial token prices on Proof. Proof’s government-registered liens ensure that properties cannot be legally sold by title holders before token holders using Proof, at the very least, receive funds at the initial price at which Proof purchased fractional ownership, while the contracts between Proof and property developers stipulates that token holders receive profits based on future sales prices. Proof stores these legal agreements on the distributed Storj blockchain, while referring to these agreements via file hashes within blockchain-based smart contracts that administer ownership records for Proof users.
“We created Proof to give everyday people access to high-yield investments, like hot real-estate and invoice factoring,” says CEO and co-founder
Mike De’Shazer. He continues:
“Today these kinds of investments are available, in a large part, exclusively to high net-worth individuals and medium-to-large companies. This kind of segmentation grows wealth inequality gaps. We created Proof to eventually level the playing field and ultimately minimise these gaps.”
Until recently, investors interested in investing in property had to purchase publicly traded real estate investment trust (or REITs) as baskets of properties on large exchanges. The alternative to exchanges were private REITs, with minimum investments of $1,000, and services such as America-based Fundrise.
“The big issues with private REITs is that you are usually locked in for a period of years,” says CTO Tai Kersten. “With our platform, you can trade your investment stakes at any time and get access to liquidity.” Proof provides a
marketplace for users to sell their property investments to other users peer-to-peer, as well as collect cash dividends when rents are paid and participate in liquidation events when a property is sold by a property’s deed holder.
Proof, via the Proof Dashboard, allows users to fund their accounts with cryptocurrencies like Bitcoin and Ethereum, as well as by credit card, bringing investors from the crypto-world into real estate and debt financing. Users can convert bitcoin to cash and vice-versa, serving also as a type of exchange, some would argue, a bank. Proof currently has four investment vehicles on its website, from a crowdsourcing project for a property in Dubai to property investments in Korean residential properties, and even a small business loan.
“This is just the beginning,” says CIO David Van Isacker. “We are currently focused on scaling our technology and bringing on more partners to offer new ways for people to easily invest small into big things.”
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