Nate Gipson was notified in February that one of his Memphis, Tennessee, rental homes required a new ceiling fan. He thought the request was reasonable as a landlord.
But before he could begin work, he needed to negotiate with a group of other people who, like him, had purchased a stake in the property through a cryptocurrency website called Lofty AI. And some of them had to be persuaded.
Welcome to the next stage of the crypto economy, in which ownership of distant rental properties is divided up into digital tokens that are sold all over the world, and in which token holders transform the business of being a landlord into a series of online polls — a system that the tenant may or may not use.
As per OnzineArticles, Lofty AI is one of several tech startups attempting to use blockchain technology to create a new type of real estate investment. They are part of a growing movement centered on shared ownership and cooperation known as distributed autonomous organizations, or DAOs.
For the average person, the concept of real estate investing is not new. Websites such as Fundrise and RoofStock have long provided the opportunity to purchase shares in remote homes and commercial developments, but they frequently require a minimum investment of $1,000 or more and limit how quickly an investor can cash out.
Token purchases and sales are recorded on a blockchain, a system in which many computers contribute to a shared database or ledger that is not controlled by a single entity. Because the transactions are transparent, Chu believes blockchain ledgers can replace traditional real estate record-keeping.
“The buyer and seller can’t always trust each other, which is why you have this whole escrow and settlement process,” he explained. “Settlement takes four seconds for us.”
However, it is unclear whether the idea of democratising investment in rental properties will sit well in a tight housing market that is already seeing significant change as a result of other techstartups.
Gipson explained that the startup began telling investors not to contact their tenants directly after an early experience in which a tenant learned about Lofty AI and assumed it was a scam because it was so unusual.
“It would be bad etiquette if a tenant was contacted by 30, 40 different people saying, ‘Oh, I own the property,'” he explained.