Blockchain Lending On Real-World Assets Is Brickblock Missionbr>
Brickblock, an investment platform connecting real-world assets and cryptocurrencies, is partnering with ETHLend to explore the possibilities of lending with blockchain technology.
ETHLend is a decentralized peer-to-peer lending application that runs on the ethereum blockchain network. ETHLend provides a global lending market that connects lenders and borrowers from all over the world, offering secured loans with the use of ERC-20 compatible digital tokens as a collateral.
The application is ideal for token holders who are in need for liquidity and those who want to participate in a free lending market. Instead of selling and closing a token position, a borrower can pledge digital tokens to receive ether. Moreover, ETHLend is introducing token lending, which enables profiting from any down market by enabling a short- selling market.
Brickblock is a trading platform that connects real-world assets and cryptocurrencies. Built on the ethereum blockchain, Brickblock allows holders of cryptocurrencies to invest in real estate and exchange-traded funds (ETFs) without requiring them to exchange their digital asset into fiat currency. The platform also enables direct investment into both active and passive coin (ie. cryptocurrency) funds. This month, the company will sell its first tokenized real estate building on the blockchain. This is done by issuing Proof of Asset (PoA) tokens, which ensure investors’ legal claim of the underlying asset.
Dr. Wolfgang Richter talked with Block Tribune about the plans.
BLOCK TRIBUNE: How will this work?
DR. WOLFGANG RICHTER: Once the investor arrives at the website they will be able to choose an asset class, either REF or ETF, they can select a fund based on their investment preferences. Investors will be informed about fees, frequency of distributions, areas of investment, current net asset value (NAV), minimum investment volume, performance or track record. Once they have selected a fund, they will be asked to deposit the desired investment amount into a smart contract.
DR. WOLFGANG RICHTER: The investor is free to trade the token at any time. Therefore, all potential profit out of the token price increase is for him. Additionally, there might be a participation reflecting the positive contribution to the platform traffic. However, this will depend on the characteristics of the specific deal and there is no final structure about that agreed-upon.
BLOCK TRIBUNE: Why is an ETF a better bet than an individual coin like bitcoin?
DR. WOLFGANG RICHTER: Bitcoin is a pure exchange token, i.e. it has no other underlying rights attached to it and is therefore not backed by any real assets. Therefore, it’s pricing totally depends on whether the market participants view Bitcoin as a more attractive exchange coin as US dollar or euro, for instance. Yet tokenized ETF is totally different since ETF is a real asset with a specific cash flow as a consequence of holding ETF. Therefore, it is totally asset-backed and the pricing of the ETF token will always refer to the pricing of the ETF itself. Now, it depends on what the investor is looking for: if he wants security for the investment, then clearly ETF tokens are much better because of their real asset collateral; if investors are looking for potentially high profits, then a tokenized real asset would only make sense if the underlying real asset has such high profit potential; otherwise he has to go with products like Bitcoin which can appreciate tremendously because the price only depends on speculative demand (but also the downside is tremendous, no downside protection through the collateral of a stable real asset).
BLOCK TRIBUNE: Beyond real estate and coin funds, what else is contemplated as an ETF candidate?
DR. WOLFGANG RICHTER: At this point, the real assets contemplated are real estate and ETF. Yet as the logic of the organization is the same, we have included additionally crypto funds.
BLOCK TRIBUNE: What are your expectations for the Third World regarding ETF investments? Some have argued that the economic engines of those countries can be unlocked by cryptocurrency. What say you?
DR. WOLFGANG RICHTER: There are huge opportunities for the Third World regarding crypto currencies. Firstly, it allows easy and low cost/cost free transfer of funds via smart phones. Since a huge amount of Third World citizens don’t have a bank account, they don’t have access to traditional bank products, however, through the blog chain based crypto currency products, they can immediately engage in economic activity which is based on interacting by distributing funds/salaries/freelancer etc. Secondly, crypto currencies have the quality of motivating local communities to starting economic activities whereby payments are based on such local crypto coins. Even though they may have little value in the beginning, they still have some value within the community, and once such activities and therefore the coins related to this increase in volume, the value of the local crypto coin rises and there will be also the option to exchange it against US dollars/euros etc.
BLOCK TRIBUNE: Why does the partnership have to wait until the ICO is done and the sale of the apartment is made? Proof of concept to others?
DR. WOLFGANG RICHTER: We can agree on the partnership immediately. However our main focus has been the ICO and finalising plans for the sale of the apartment building. Once this has been finalised in December then we will turn our attention to ETF aspect of the platform.