Bloq founder creates real estate DAO to automate business processes and reduce real estate fraud

Bitcoin entrepreneur and Bloq founder Jeff Garzik outlined important applications of blockchain technology in the real estate industry at the International Blockchain Real Estate Association (IBREA) conference.

He explained the benefits that blockchain technology can bring to real estate companies: automated payments, reduced fraud, elimination of bad checks, more real-time property data, more trustworthy property information, and more auditable transactions.

Garzik is also creating a real estate decentralized autonomous organization (DAO), a real estate investment fund created on the blockchain. Garzik also sits on the board of directors of IBREA.

The unique advantages of blockchain

“Blockchain technology can reduce fraud, reduce bounced checks, and reduce chargeback fraud,” Garzik said.

Credit cards are a 'pull' payment method, where any merchant who has access to a person's credit card information can withdraw funds from the card. In contrast, blockchain payment systems are 'push', which means that you authorize each transaction yourself; no one else can 'pull' funds from you, so this method is more secure.

One of the key benefits blockchain brings to real estate is ‘deep data’, which is additional information about properties and customers. “When you store more information on the blockchain, deep data allows you to make better investment decisions, you can also do real-time audits, real-time risk management… which ultimately helps maximize sales,” he said. “The more data you get, the more you understand.”

The benefits of “deeper data”

He said that whether you are a developer or an investor, 'deeper data always means better'.

Information accuracy is another benefit of blockchain.

“Blockchain provides a great timeline for transactions, documents, etc., so you have greater trust in those data sets. For example, when you go to a real estate sales center and you’re flipping through the property brochure, you might find that someone has torn out a page or scribbled on it,” he said. “Blockchain provides provable data sources, better and more trusted data. Better data leads to better understanding and better decision execution.”

DAOs and Real Estate

Grazik closed by discussing a topic that has been making headlines in the financial technology community lately: a new concept called decentralized autonomous organizations (DAOs). The concept involves putting an organization's business processes into computer code, which computers can actually use to move money. In a DAO investment fund, the financial management or investment evaluation business processes would be in computer code. "It's a fully automated 'lights-out' management. However, on the other hand, it's very transparent and auditable. When some property ownership is transferred, you can see it clearly. Everyone can prove the source of ownership and the source of the asset transfer."

Recently, Garzik said, the first large DAO raised more than $100 million. “DAOs are no longer just an experiment. They are real.”

Garzik likened DAOs to self-driving cars — “How do you put bumpers on a DAO?”

While this is all very exciting, he noted that “from a regulatory perspective, the DAO does not have a single regulator, which creates a lot of difficulties in terms of regulation and law.”

Many blockchain applications

“Blockchain is breaking down barriers, it’s opening up new markets, it’s freeing up the budgets of Fortune 500 companies,” Garzik said.

He believes every central bank and Wall Street firm is investigating blockchain technology. “We think it’s time for the real estate market to do the same.”

Garzik said that one of his personal projects is to create a real estate DAO. This DAO is similar to a real estate investment fund. "This real estate DAO is based on the blockchain; it has full ownership and asset transfer sources. You can see all the records of suppliers and real estate management."

This real estate DAO is tentatively scheduled to be launched in the fourth quarter of this year.