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Industry Solutions, Financial Services

Financial Services Case Study: Magnum Real Estate, Blockchain Transactions, and Google Cloud

By Leah Zitter | August 10, 2022

Realtors trade property for cryptocurrency for various reasons. It's cheap, because crypto is transacted over the blockchain, a distributed, shared ledger. There are no middlemen, like notaries, lawyers, title companies, brokers, banks, or attorneys, which affords agents drastic savings. It's also fast. A blockchain-processed transaction slashes standard home-buying timelines from around three months to three weeks. The peer-to-peer transaction cuts out the hassle of hiring and working through intermediaries, and the seller and buyer secure documents on a ledger that automatically updates and distributes these forms among stakeholders. This eliminates the hassle of back-and-forth review of paperwork.

Blockchain is also transparent - - because all blockchain participants communicate in real time and review transactions as they cross the blockchain - - and secure. Realtors use the blockchain ledger to encrypt titles, leases, and other contracts on the premise that its allegedly unhackable network is arguably safer and more secure than the centralized cloud.


Fractional Investment in Tokenized Real Estate


Some modern realtors trade pieces of property for crypto, in hopes of democratizing the market for buyers. Relatively few people have the money to invest in quality real estate. Fewer still have the funds for premium commercial property such as offices, nursing homes, or hotels. However, for buyers with Bitcoin, Ethereum, or Ripple, the property is simply divided into pieces. Each block is auctioned off for a specific amount of cryptocurrency, so instead of buying the entire infrastructure, interested parties simply buy that bit off the premise, making it more affordable. That fractionalized asset can later be traded for fiat or cryptocurrency, or retained for lodging or business purposes.


Smart Contracts and Blockchain-Processed Real Estate


All PropTech transactions are paired with blockchain programmed smart contracts that protect and secure the transaction process. Smart contracts automatically release funds when contract conditions are met and withhold them in cases of dispute. These digitized smart contacts allow buyers to claim that proffered property once they've paid the realtor the required amount of Bitcoin and fulfilled the conditions listed in that contract.


Example: Magnum Real Estate Group

New York-based Magnum Real Estate Group, which uses the Google Cloud Platform for its realty services, started selling condos for Bitcoin back in 2018. Google Cloud helps Magnum automatically update its commercial real estate listings and provides real-time updates that gives its team timely insights into real estate performance and pricing. Prospective tenants and their representatives have immediate access to the dashboard's functionalities, helping them see details on properties as they update. Google Cloud also automatically scales workloads up and down and drastically reduces cloud hosting costs, among other benefits. In short, Google Cloud provides a continuous integration and deployment model with fast and accurate data and unprecedented scalability that gives Magnum an edge over competitors.

In September, 2021, Magnum made headlines by advertising that they would sell three retail condos in Manhattan's Upper East Side for the equivalent of $29 Million in Bitcoin. Magnum's step was significant, since it marks the most robust property investment opportunity for crypto investors yet. Managing partner of Magnum Real Estate Group Ben Shaoul has sold more than $25 million worth of commercial and residential real estate in cyber currency since 2018.

All crypto transactions are completed by Magnum using BitPay, a crypto payment processor with substantial experience in property transactions. Buyers deposit Bitcoin payments in BitPay's "wallet." BitPay converts this Bitcoin into fiat and wires those funds to Magnum. The entire transaction is completed overnight, in contrast to the standard thirty to ninety days required for fiat.

By using blockchain-transacted cryptocurrency, Magnum can now transact faster, cheaper and more securely with traders from around the world. It's a digital wallet-to-wallet process that cuts out legacy banks and their legislations, costs, and time lags. The process is vetted by blockchain participants. PropTech realtors say the company is considering tokenizing its properties in the future.


Impact of Blockchain-Processed Real Estate


According to Ben Shaoul, "Accepting cryptocurrency for select condominiums in our New York City portfolio enabled us to expand our buyer pool." That's because "you are opening up real estate investment to a whole new demographic of investors," Shaoul says. "Crypto currency holders are a different type of person. They aren't just finance people, or doctors and lawyers who own stocks. These are bus drivers, school teachers, and cab drivers."

Speaking to Yahoo Finance, the Magnum developer said: "There's a demand for real estate and there's nothing being offered to the holders of crypto. Our idea is to offer something that's unique and try to pair the holders of crypto with those who want to sell real estate."


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