Blockchain technology is being incorporated nearly everywhere. Hospitals are using it to secure and share patient files. Accountants and banks are investing in the blockchain as a means of increasing the speed and security of financial transactions. Even in the real estate markets, the blockchain is transforming the way things are done. 

Real estate may not seem like the obvious industry to capitalise on blockchain technology. However, experts believe it can help make a positive difference in the efficiency and security of real estate transactions. Rather than working in person, the blockchain may enable more online transactions to realistically take place. 

Taking Real Estate Online

In the modern world of smartphones, the internet, and apps that all work together to put the world at your fingertips, customers have come to expect a certain ease-of-use. This sentiment carries from easy online shopping to scheduling appointments online to buying a house. The rules for customer courtesy are changing and the real estate market is using the blockchain to meet the demand. 

One of the primary ways the real estate market has changed is by taking listings online where customers can browse homes and find an agent with an easy click of a button. However, the blockchain stands to create an even larger online opportunity for real estate. With the blockchain behind them, many agents believe they could complete the entire process — outside of physically visiting the home — online. 

Some platforms are coming online that do just that. In order to use the blockchain, real estate companies “tokenise” their assets, so the property can be traded on an exchange similar to that of the stock market. The tokens can easily be traded or exchanged for money — i.e. purchasing a home. Doing this could cut out a lot of the middlemen in the home buying process and create a more straightforward and transparent opportunity for consumers.  

Increasing Speed And Reducing Fraud

Incorporating blockchain technology into the real estate market can also be a huge boon to consumers in other ways. Because all transactions are verified on a network of computers, transactions can be completed in minutes or even seconds. Rather than relying on people to review transactions and operate within normal business hours, these transactions can happen anywhere at any time. This speeds up the process substantially. 

Because all blockchain transactions are completed on a public ledger, all parties can see the transaction at all times. Traditional methods are prone to fraud and human errors, but this increases transparency profoundly and helps reduce the likelihood of fraud taking place. Furthermore, the blockchain is an incredibly tamper-proof means of storing information, which makes it one of the most secure means of doing business. 

Part of the reason the blockchain is so secure is that the information is decentralised. It would be incredibly difficult for a fraudster to change a blockchain transaction that is stored on hundreds of different computers across the country without someone noticing. Ultimately, this increases trust in the real estate market system, which doesn’t have too far back in history to look for proof of the dangers of a lack of transparency. The 2008 housing crisis is a prime example of what can happen.   

New Opportunities

Real estate companies are interacting with more data than ever before. Some of this data is internal, relating to sales figures and revenue, while some of it is external such as data collected by government or social media entities. All of this adds up to provide real estate agents with a broader picture of the markets they are working in and offers the ability to create innovative opportunities. 

For instance, once properties have been “tokenised” it is easy to divide them up in meaningful ways. Fractional ownership becomes a much more straightforward and realistic option. This could be a scenario where investors are given the equivalent number of tokens to represent the per cent of the investment they’ve made. Ultimately, it could lower investment costs and barriers to entry into investment markets. 

Conclusion

Blockchain technology is truly transforming the real estate industry. The technology stands to speed up transactions and reduce the number of middlemen involved, all while bolstering security. Additionally, the technology can open up a number of new opportunities such as fractional ownership for investors that could generate a lot more wealth among certain sectors of the population. It could be a win-win advancement.

Michael Kamerman, CEO of Skilling explains why crypto is here to stay. 

On the one hand, the continuing emergence of new cryptocurrencies presents a new way for traders to manage their finances, but on the other, crypto is perceived as a “get rich scheme” influenced by endorsements from celebrities and social media. The Bank of England is pushing to regulate crypto, arguing its volatility poses an existential threat to the global financial system, which is problematic for those who know of its potential and see its drive within the younger generation. Today’s retail traders must apply emotional intelligence and carry out thorough research in their crypto trading if they wish to reap long-term rewards from its growth.

Crypto’s misguided reputation

For those not yet involved in crypto trading, the crypto world may seem slightly daunting to begin putting their hard-earned money into. Its current volatility is sometimes directly driven by notable influencers online such as Elon Musk who recently, upon simply sharing a picture of his dog on social media, dramatically raised the value of the Shiba Inu coin - which is now the world’s 11th largest crypto. Social media influence from magnates directly causing the rise and fall of crypto assets has also been seen with other popular cryptos such as Dogecoin, emphasising the importance of applying emotional intelligence when trading.

It doesn’t help that many brokers have taken advantage of the current crypto zeitgeist to create novel crypto coins and tokens – leading traders to unwittingly embark on “pump and dump” schemes. Taking advantage of novice traders by promising to multiply their investment, only to then pull the rug out from underneath them, has also unfairly tarnished crypto’s reputation, epitomised by the recent Squid Game tokens scandal.

However, instability is to be expected with a decentralised asset such as crypto. The fact that it is not issued, regulated, or backed by a central authority cannot be foolishly overlooked. Whilst this can be attractive to novice and younger traders in particular, traders must be mindful of what exactly they are putting their money into by conducting extensive research and not allowing themselves to become emotionally influenced by any social media hype. Crypto can prove to be an incredibly successful financial investment if traders aren’t foolish. After all, you wouldn’t invest in a property without carrying out your due diligence beforehand, nor would you invest in it simply because a celebrity promoted it, so why would you when it comes to crypto investment?

Emotional intelligence and crypto

With a social media post about crypto being uploaded every 2 seconds on the internet, fluctuations in a crypto coin or token’s value are often driven by the over-excitement or fear that comes with it. Fear of missing out on a profit or losing money may cause traders to make a regrettable decision with their trading, resulting in “bad plays” as the value of the coin dramatically changes, for seemingly no reason, sometimes in the space of a few hours.

To mitigate risks, traders need to make sure they are emotionally rational with their investment decisions. Constantly looking at the price of a coin in fear of losing money or missing out on a gain, can do more harm than good, leading to reckless, unwise decisions being made. Instead, being thorough in prior research of a crypto and trusting in its value will help make sure a social media post from a particular celebrity doesn’t cause traders to panic.

A young person’s game

Traditionally, consumers looking to diversify their financial portfolio would likely consider investing in stocks and bonds as a “safe” way of ensuring long term financial gain. Today’s older generations, who started their investing journey decades earlier, are now reaping the benefits and are less concerned with making money in the short-term in a way that might be risky.

For today’s younger, more adventurous and risk-taking traders, stocks and bonds are too slow a way of making money. With many having the luxury of more time on their hands, they can afford to take bigger risks with their investments to multiply their money faster than traditional forms of investments. Crypto is the perfect asset for them to champion, with certain tokens having incredibly innovative business models and using technology in ways that will likely continue to shake up the industry in the coming years. 

Nevertheless, with investing in something as exciting yet volatile as crypto, retail traders need to keep a level head to ride through the inevitable peaks and troughs. Prospective traders should make sure to assess crypto investments as they would any other investment, as being too emotionally vested in the initial outcome may end up hurting their capital, leaving them disillusioned and dissatisfied.

Ultimately, crypto is like any other asset in the market - its value is driven by investors who bump and lower the price. What is fundamentally different, however, is the severity and speed by which its value can change. In such a volatile space, it is crucial that investors are considered, thorough, and apply significant emotional intelligence if they wish to successfully cash in on crypto investment.

This article does not constitute investment advice. 66% of retail CFD accounts lose money. Trading cryptocurrency is not available for UK retail clients.

We are seeing an unprecedented shift in consumer spending habits. But this rapid growth is introducing new challenges. Fraud is rising, yet merchants are under pressure to deliver the seamless payment experiences that consumers increasingly demand.

Network tokenization is one of many technologies that online merchants are turning to in a bid to strike the right balance between high security and a frictionless buying experience.

But according to Andre Stoorvogel, Director of Product Marketing at Rambus Payments, we should not think of network tokenization as an optional add-on. Rather, it is a foundational technology enabling secure, simple digital commerce.

What is network tokenization?

With network tokenization, the payment networks replace a primary account number (PAN) with a unique payment token that is restricted in its usage, for example, to a specific device, merchant, transaction type or channel.

The question is, how is network tokenization different to existing third-party proprietary tokens?

The main (and crucial) difference is that network tokenization ensures that card details are protected throughout the entire transaction lifecycle. Non-network tokens don’t offer this end-to-end security, introducing weaknesses at various points for fraudsters to exploit.

Network tokenization also introduces improved credential lifecycle management to keep card details current, whereas proprietary tokens do not always have issuer permission to access and manage the underlying account data.

Finally, network tokenization opens opportunities for new, enhanced buying experiences across existing and emerging channels.

What are the benefits of network tokenization for online commerce?

To fully appreciate the unique value that network tokens bring to the payments ecosystem, we need to understand how they can address the key pain points for e-commerce merchants.

• Reducing the cost of fraud

We can’t get away from it. Online commerce has a fraud problem.

E-commerce fraud is growing twice as fast as e-commerce sales, with retailers set to lose $130 billion between 2018 and 2023.

We should not be surprised that one in two US merchants see fraud prevention as ‘an increasingly challenging task’. They are already spending $3.48 to combat every dollar of fraud (and this is set to rise with the global cost of fraud prevention increasing by 4% year-on-year).

And yet, the fraud rates keep on climbing. In a hyper-competitive industry where every cent counts, blindly throwing money at a problem is not a sustainable strategy.

The end-to-end security proposition of network tokenization significantly reduces the risk, and mitigates the impact, of malware, phishing attacks and data breaches. Put simply, tokenized card data is useless if stolen and for this reason, network tokenization should be the foundation on which a layered fraud management approach is built.

• Combatting false declines

Given the scale of the fraud challenge, merchants and issuers are understandably adopting a cautious approach. Transaction approval rates for digital transactions stand at around 85%, compared to 97% for in-store transactions.

This leads to a high prevalence of ‘false declines’, where a valid transaction from an authorized cardholder is rejected by the merchant. Often the cause is something simple, such as an outdated billing address, but the results can be incredibly damaging.

Globally, false declines cost merchants $331 billion. 66% of consumers stop shopping with a retailer after a false decline. Unnecessary declines outstrip actual fraud 13 times over. Most tellingly, US e-commerce merchants are losing a total of $8.6 billion to declines, compared to the $6.5 billion of fraud they are actually preventing.

Network tokens can increase approval rates to reduce instances of false declines. This is because card details are automatically updated and refreshed, making it less likely for an erroneous data point to raise a red flag. Also, tokenized transactions are inherently more secure so less likely to be viewed as risky.

• Enhancing the checkout experience

Despite the huge challenges posed by rising fraud, it is telling that 91% of merchants identify ‘minimizing the amount of friction introduced into the user experience’ as the main priority when evaluating their approach to securing payments.

Introducing additional friction into the checkout process, then, is a no-go. But as network tokenization reduces the value of the underlying sensitive data, it adds an invisible layer of security.

We must also remember that merchants want to focus on payment innovation, not fraud prevention. Network tokenization is more than just a security play, and can be used to enhance the buying experience.

For example, it enables consumers to see a fully branded card when checking out, rather than a mish-mash of starred credentials and the final four digits. This boosts recognition, familiarity and engagement.

It also enables payment details to be instantly refreshed when a card is lost, stolen or expires. Better still, it can enable consumers to keep track of where and when their payment credentials are being used. For example, card details could easily be push provisioned to merchant apps.

What is the industry roadmap for network tokenization?

Given the clear benefits, we are already seeing strong momentum for network tokenization for card-on-file transactions. And with EMV Secure Remote Commerce poised to debut in 2019, we can expect to see network tokenization extend to ‘guest checkout’ experiences.

There are options available for merchants and payment service providers (PSPs) looking to implement network tokenization solutions. For those with significant strategic resource, time and technical capacity, direct integration with the payment systems is an option.

Alternatively, for those looking to move quickly, qualified technology partners offer a fast-track to the immediate benefits of network tokenization (without the potential integration headaches).

With the introduction of blockchain technology and the implementation of the token economy, Gary McKay, CEO and founder of APPII, believes the 4^th industrial revolution is about to take place, potentially in the coming year.

The industrial advances being brought about by artificial intelligence (AI), robotics, the Internet of Things (IoT) and blockchain technology will outstrip the industrial transformation of the last two centuries. It’s not an exaggeration to say that we are on the edge of the next great industrial revolution – Industry 4.0.

While the third and most recent industrial revolution reshaped our lives through digital transformation and social media, this next logical step will address the issues of complexity that still exist. Today, there are a myriad of processes that are still done manually – wasting time and money through inefficiencies and fraud. Industry 4.0 will see these processes automated and undertaken by digital systems, ultimately moving towards a decentralised worldview, where value is shared across systems rather than being accumulated at the centre by large organisations.

One of the main technological drivers behind this coming revolution will be blockchain, cryptocurrency, and tokens. In fact, they are already beginning to disrupt a number of industries, paving the way for Industry 4.0 today.

Paving the way for Industry 4.0 today

In the finance sector, blockchain technology, cryptocurrency and AI have been instrumental in dragging the archaic industry into the 21^st century. Processes that historically involved long, time-consuming human administration and processing are now streamlined, freeing up much needed time to focus on more complex cognitive tasks. For example, financial companies are now harnessing blockchain technology to process loan applications. Rather than relying on a third-party broker service to verify an individual’s identity and credit history, loan advisors can now refer to blockchains to access verified data on credit and debit histories – reducing the time and cost it takes to approve loans.

While there has understandably been a significant amount of investment from financial companies in blockchain technology which has dominated the headlines, blockchain has the potential to disrupt virtually every other third-party broker industry; from real estate, the legal profession and insurance to recruitment, art and antiquities. As such, blockchain and the cryptocurrencies and tokens that it supports, are beginning to pave the way for disruption across every single industry – ultimately becoming the keystone for Industry 4.0.

Turning investment on its head with ICOs

In the last year alone, more than $2billion has been raised towards blockchain projects via Initial Coin Offerings (ICOs) or Token Sales. Unsurprisingly, initial investment rounds and ICO funding were directed towards blockchain platforms that offered services to the finance industry. However, as the potential disruptive power of blockchain, cryptocurrency and tokens have become more apparent, capital has started to move towards platforms harnessing the technology outside the world of finance. In particular, the big players in highly competitive markets are looking to blockchain start-up platforms to give them an edge over competitors. For example, Technojobs, one of the UK’s leading recruitment jobsites, has invested in our platform, which offers blockchain-verified CVs for the first time.

Blockchain technology is fundamentally changing the way investment is made, paving the way for how we will raise and invest in companies following the fourth industrial revolution. As a means of transferring value in a decentralised way, blockchain platforms have introduced cryptocurrency and tokens, as a substitute for traditional currency like British pounds or American dollars. Since Bitcoin’s creation in 2009, over 900 different cryptocurrencies and tokens have been created.

These cryptocurrencies and tokens can be used as an exchange for value within the platform that provides them. As such, new blockchain start-ups are choosing to raise capital for developing their platforms through ICOs and Token Sales instead of following the more traditional routes of fundraising through VCs and seed funding. The ultimate aim of ICOs is to create a token model economy on the blockchain platforms that fundamentally changes the industry the start-up is trying to disrupt. Underpinned by blockchain, ICOs are predicted to have a genuinely profound impact on every sector worldwide.

This intrinsically new way of raising capital will not only become the foundation for Industry 4.0 - as a novel concept it will drive capital towards the start-ups developing platforms in these new technologies much more quickly than through traditional methods. For example, in the recruitment sector tokens could be used as a reward for organisations who verify data on CVs, or alternatively as a reward from organisations to candidates for allowing them to view their verified profiles. Ultimately this will create a mutually beneficial environment where organisations can use tokens collected from verifying CV data to view individuals’ verified CVs.

A token-based economy will fundamentally turn the existing model in recruitment on its head. The traditional means of exchanging value, heavily weighted in companies’ favour, will be democratised, shifting the distribution of benefit in business models to the edge (i.e. to candidates and employers) instead of accumulating in the middle.

It would be remiss to not acknowledge that cryptocurrency and ICOs have come under fire in recent times, with crypto-sceptics highlighting the risks associated with a young and, at times, volatile market. While the global crypto market has been subject to short spikes, sophisticated investors should be looking at this new technology with long-term value in mind.

We are already staring at the upcoming horizon of Industry 4.0, and investment and development in blockchain technology and cryptocurrencies will bring this new revolution about in record time. Moving towards decentralised autonomous networks will streamline all aspects of life, freeing up precious time and capital to focus on the more complex, cognitive tasks that we have little time to dedicate towards when caught up in lengthy manual processes. Harnessing blockchain to create a token economy will fundamentally underpin the new world post Industry 4.0, and we are only beginning to see the tip of the ice berg when it comes to benefits.

Barely a day passes by now on the internet when I am not offered to subscribe to the ICO (initial coin offering) of a new currency. If the statistics are to be believed, there are 11,000 of these new currencies, of which 1,200 or so are capable of being traded on the various cryptocurrency exchanges which have popped up around the world in recent times. But why are there so many of these new currencies popping up and how do they differ from one another? Richard Tall at DWF explains.

Cryptocurrencies - the 'next-gen' currency  

The first cryptocurrency was Bitcoin, and this has been with us since 2009. Bitcoin has in reality only been in the public consciousness for the last three or four years and most cryptocurrencies have been created within that time period. As it is now mainstream, Bitcoin can be used as a means of payment either through transfer over the internet, or by use of bank cards which are linked to accounts denominated in Bitcoin. In the modern environment, where so few of us use cash, it has the same sort of functionality as a fiat currency, albeit that the numbers of traders and businesses which are prepared to accept it remain in the significant minority.

Like Bitcoin, most new cryptocurrencies have their genesis in smart contracts. A smart contract is a computer protocol which enables a contract to execute automatically. The basis of a smart contract is that if X happens then Y will flow from that. Most of us would recognise that as a conditional contract, but a smart contract enables this obligation to happen in the decentralized world for those who sign up and agree to its protocol.

The rise of the token

The vast majority of new cryptocurrencies do not create their units in the same way as Bitcoin, though. A Bitcoin is created by solving an algorithm, the reward being generated through proof-of-work. Generally, most new cryptocurrencies being made now are offered as a token which is created by the originator and then traded through the blockchain. This is known as a proof-of-stake. An ICO in these circumstances will simply offer tokens for subscription by investors, usually to raise money for the next stage of development of their project, and in many ways an ICO shares many characteristics with an IPO of a development stage company. Many of us will remember the dot com era, where numerous companies sought funds to take themselves to the next stage of development, with the investors being asked at IPO to invest in the idea rather than a revenue, or indeed profit, generating business.

Coins and tokens - the regulator's perspective

The similarities between ICOs and IPOs have not escaped the attention of regulators. An offer of shares or bonds is clearly within the bailiwick of regulators and so both are subject to a host of legislation. However, the general mantra with an ICO and a cryptocurrency is that they are "unregulated." Bearing in mind money laundering and anti-financial crime legislation, "unregulated" is entirely inapt as a tag. Equally, little thought has been given by ICO originators as to the true nature of what is being offered. The SEC (the US Securities and Exchange Commission) has recently ruled that ether (the tokens behind Ethereum) are securities, on the basis that they are an investment contract (investment of money in a common enterprise with an expectation of profit). Accordingly, the SEC's view is that ether offers should have been conducted in accordance with securities laws. Many other regulators are issuing similar warnings, and making the point that simply because a new technology is being used it does not mean that the resulting token is outside long-established principles of consumer regulation. As a broad rule of thumb:

• If a token offers voting or similar rights it will be treated as a security, as it shares its characteristics with shares;
• If it offers redemption it will be an instrument creating or acknowledging indebtedness, or colloquially a bond;
• If it derives its value from fluctuations in value of another asset it is likely to be some form of derivative.

Whether an ICO is of any merit depends ultimately on the utility of the token offered and what it is capable of doing. Clearly the aim of most ICOs is for the value of the token to increase over time, and any investor needs to look closely at whether that will ever come to pass. Equally, those originating ICOs need to exercise extreme caution in relation to the terms of the tokens offered and the jurisdictions into which they are offered. This is a red-hot topic for regulators who definitely do not share the view that this arena is "unregulated".