This interview is part of our new Blockchain In Real Estate series, where we interview the world's leading thought leaders on the front lines of the intersections between blockchain and real estate.
In this interview we speak with Jakob Drzazga, CEO and co-founder of Brickblock, to understand how his company is using blockchain to transform the real estate business, and what the future of the industry holds.
1. What's the story behind Brickblock? Why and how did you begin?
JD: I originally wanted to create my own real estate fund after being involved in single real estate developments for multiple years. However, the process was very slow, manual, and presented various challenges. I was surprised to find that there were no digital solutions in the market.
During my search for an anchor investor in late 2016, I met my co-founder Martin who was a blockchain native. After learning from him how blockchain can empower different industries to gain more efficiency, I connected the dots. Blockchain is a perfect base technology for the real estate fund market.
We started Brickblock in early 2017. Since then, Brickblock has evolved a lot and facilitated the launch of several pilot projects like the tokenization of the first property and also the first real estate fund in the European Union.
2. Please describe your use case and how Brickblock uses blockchain:
JD: We at Brickblock have developed a platform called ScalingFunds. It provides fund managers with a way to fully digitize the investment process. We streamline every step of the fund lifecycle: AML/KYC verification, contract signatures, share issuance, dividend payouts, trading, and liquidation. All online, anywhere, anytime.
We are using the blockchain as a database for the shareholder registry instead of a centralized or even paper-based database. This provides many advantages over traditional players. For example, we offer an instant secondary market within our software suite, enhanced security, and the ability to complete transactions within minutes instead of weeks.
3. Could you share a specific customer/user that benefits from what you offer? What has your service done for them?
JD: One of our recent customers is Peakside Capital. They are an established real estate fund manager with over 1bn Assets under Management. Peakside recently partnered with us to introduce their latest €200M fund.
We are helping them to reap the benefits of a full fund digitization. Now it is easier for Peakside to raise faster by automated investor onboarding and the possibility to invest with lower ticket sizes while reducing back-office administrative tasks.
One quote I saw from Peakside's founding partner Stefan Aumann in a German newspaper summarizes it very well: “We want to leverage the advances in technology to increase liquidity and transaction speed in the real estate funds sector, as well as broaden our investor base”
4. What other blockchain use cases in real estate are you excited about?
JD: I am currently leading the working group Real Estate at the International Association for Trusted Blockchain Applications (INATBA), a European Commission spin-off. We are currently working on unique property identifiers for real estate. Harmonizing how properties are registered in a land registry could bring a lot of cost-saving, security, and synergies all around the world. Blockchain has the potential to facilitate this tectonic shift and bring regulators all around the world together. The global unique property identifier is a moonshot project, but I am confident that in some form blockchain will make its way into land registries. Within 20-30 years since the first retail computers appeared on the market, our bureaucracies have transformed many paper-based processes to digital once already. Why should it not be possible for us to achieve a change of the underlying technology within the next ten years?
5. Where will Brickblock be in 5 years?
JD: Our vision at Brickblock is to lead the transformation of the capital markets. We are starting with real estate funds and non-retail investors, but our technology is industry and investor agnostic. So you might find our technology used in various other use cases across capital markets.
We believe that being a player in the capital market comes with certain responsibilities. By standardizing transactions, we can significantly enhance transparency and security in the financial world. By lowering the maintenance cost, cutting out unnecessary middlemen, and adding liquidity to previously illiquid assets, we will profit even if we don't invest personally. In the long run, the advancements in technology will make capital markets more accessible to everybody, everywhere, at all times.