- June 5, 2017
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Maybe you’ve heard of the Blockchain, and maybe you haven’t. But, if we told you that your future house, car, and other offline physical property was going to be put on this thing called the Blockchain – you’d probably get interested. We know it sounds crazy, but the world is now embedded in an era where developments in technology and internet communication has made the previously impossible possible. This includes the digitization of physical properties like our homes and the things they contain. Don’t get too freaked out just yet. We’re not talking about some kind of virtual reality in where you and the things you own are going to be transformed into some kind of hazy, not so tangible, online format. Actually, we’re talking about how the growth of Blockchain technology has enabled online representations of our property to be made. This has in turn broken down barriers to ownership of property – like homes – and is creating a stark increase in the amount and breadth of assets that individuals can own.
So What the Heck is the Blockchain!?
The Blockchain is a digital and public ledger (or network of members on that ledger) whereby transactions made in a crypto currency (online money) are recorded chronologically. These digital currencies aren’t issued by any one authority, but rather are traded and used via records on this public ledger through the Blockchain technology.
The massive benefit of the Blockchain is that it has decentralized assets, so that they aren’t controlled by any one central authority – but rather are monitored through a network. Each member of the network has access to these records and they cannot be controlled or augmented by any one person or institution.
Crypto Currencies and Physical Property Going Digital
A crypto currency at the most base level is a digital currency. This means it is transacted online and does not have a physical counterpart, but can be converted into other currencies that are physical in nature. When you hear the word “crypto”, just think encrypted or the prevention of access by unauthorized persons. By virtue of it being an online only currency it has to be encrypted – hence it is a cryptocurrency.
One of the most well known of these currencies is the Bitcoin. Just how a Canadian dollar might get converted into an US dollar, a Bitcoin (BTC) might get converted into a US dollar; for example, as of this writing, the exchange rate is 2251.00 USD to 1 BTC. So, how exactly does that work? Through the Blockchain! Bitcoin is represented as a “block” (as illustrated above), also known as “tokens” on the ledger, and can be used to make purchases just like you would with world currencies; although, only where it is accepted.
The popularity of Bitcoin and other crypto currencies housed on the Blockchain has seen highs and lows, but is now hitting a place where the market is continuing to grow – with the market cap recently surpassing US $50 billion as alternatives to Bitcoin start gaining traction. A great example of the growth can be seen in the “tokenization” (blockchain ledger representations of assets) of physical property. All this means is that individuals can now issue tokens on the blockchain that represent physical property such as real estate, and these can be transacted using digital currencies or world currencies. This means that there are tokens sitting on the Blockchain ledger as a digital representation of these “real life” purchases of property, and these are what are bought and sold in these purchases.
So What!? How does this affect the quantities of assets available to people?
Buying and selling physical property through the Blockchain has decentralized property purchases and is saving time and money by reducing the need for brokers, agents and other middlemen. This development opens up the market to a much wider and globally tuned in audience than ever before. People who couldn’t previously purchase property now can. And, given that these transactions are digitally substantiated the scope of available purchasing power globally has widened, enabling people to more easily purchase property abroad.
We’ve hit a point in the development of technology where it’s only going to grow exponentially, and this is going to continue expanding the scope of what constitutes a digital asset and how many assets are actually online. In addition, the increasing accessibility to the Internet and these technologies is decreasing the barriers previously preventing broader populations to own assets at all. Now, like never before, more people have digital assets and these assets often aren’t restricted by the borders. We really do live in a time where the “global marketplace” has reached an all time high and that has drastically escalated the amount, value and definition of the digital assets that can now be owned.
Directive Communications Systems (DCS) provides resources and tools to estate planning professionals and individuals to manage digital assets; helping to keep the growth and dispersion of these assets under wraps. DCS helps you work through the estate planning process keeping you in line with the digital era.
Learn more about better managing digital assets.