Flip-City Group is a financial technology company offering a new solution for real estate tokenization: the Protocol and the Platform.

Executive Summary

Flip-City Protocol covers the technology, corporate structure, and legal compliance aspects of tokenization.

The Protocol will be a turnkey solution for anyone who wants to tokenize real estate, from developers to individuals. The Protocol is well-positioned to become the new standard of the industry.

Flip-City Platform is the marketplace for primary sales and secondary trading of tokenized assets. The Platform allows users to trade real estate in fractions with higher liquidity and lower costs.Flip-City is the first tokenization project with a viable go-to-market strategy. Our offer to market players provides clear economic incentives to use and promote our Protocol using their marketing budgets.

This whitepaper outlines the Flip-City value proposition, the marketing strategy, the business model, and the token distribution details.

Flip-City Tokens (eGreenbacks & eCoins) will be distributed among buyers during the crowd sale, the dates of which will be announced later. 

Why Blockchain?

  • Decentralization: eGreenback pushes the real estate market to become truly peer-to-peer. The transition from a centralized system to a decentralized one must be smooth to mitigate implementation risks. The integrity of the Protocol can allow two parties to make a deal without the intermediation of a third party, or to use a third party when necessary.
  • Faster Transactions: eGreenback Protocol eliminates third party brokers, lawyers and banks by adding them to the network or assuming their functions such as listings, document flow and payments. Standard registration of the title of deeds with notarized documents could take up to 60 days. An eGreenback transaction can take less than 10 minutes.
  • Global Portfolio: Individuals and institutions can buy or sell fractions of properties without borders.
  • Lower Costs: eGreenbacks have the potential to greatly reduce transaction fees by eliminating third-party intermediaries and overhead costs for exchanging assets (up to 30% of property price). The eGreenback trading fee is 2% (a reduction of up to 15-fold compared to a traditional real estate transaction), which can be further reduced as the network grows.
  • Tokenization: Fractional ownership enables purchasing real estate with a smaller ticket. Property specific tokens are customized for each property and jurisdiction. Sellers receive a flexible sales instrument, and buyers can choose from a wide variety of real estate opportunities without traditional cross-country boundaries.
  • Transparency: Ownership and transaction data is accessible to all peers on the network. It is stored in the distributed web and hashes are recorded to the blockchain. The distributed consensus is achieved via a proof-of-stake algorithm: buyers and sellers are empowered with control of their information and have more confidence in conducting transactions
  • Liquidity: Real estate owners get access to both fiat and cryptocurrency investors without traditional cross country boundaries, which highly speeds up the property sales process. Property-specific token holders can trade them in the secondary market within the eGreenback platform or wherever they want.
  • Low Entry Ticket: The ability to buy a 1/1,000 fraction of a property makes it accessible to anyone.
  • Low Transaction Cost: Traditional costs of up to 30% of property price are eliminated with tokenization.
  • Investment Portfolio: Even a small investor can diversify his portfolio by purchasing tokens of a Manhattan penthouse, a warehouse in Guangzhou, a coworking space in Amsterdam and villas in Bali.
  • Security & Protection: Due diligence procedures prior to the property token offering and distributed storage of all the collected information provide additional protection

Vision

We bring innovation to real estate markets by implementing blockchain technology in the real estate marketplace and crowdfunding business models. Our goal is to promote blockchain and cryptocurrencies to the mass market by solving the traditional problems of investments in real estate.

We look forward to a brilliant future where all real estate registries are based on blockchain technology and can be combined into a transparent and secure worldwide distributed ledger that allows users to trade real estate
fast, without intermediaries and with low transaction costs. We are eager to partner with all government and private projects to make this future come true faster.

Although direct interaction with governments is very important in the long term, business is much faster to adopt innovations, especially when they directly affect financial results. Promotion of blockchain technologies to business leaders will increase the lobby for further steps in the adoption of blockchain registries. We offer real estate market players our Protocol for real estate tokenization, and the Platform for exchanging tokenized real estate assets. Tokenization enables trading real estate in small fractions and makes it accessible as a result. Sellers attract new buyers who could not afford to buy real estate before, didn’t have the opportunity to invest internationally, didn’t want to bear high transaction costs, or wanted to pay for real estate with cryptocurrency. Buyers are additionally motivated by the transparency and liquidity provided by the secondary market within the Platform and the secure transaction records stored on the blockchain.

eGreenbacks makes it possible to buy and sell tokenized real estate assets in a trusted, fast and smooth manner with instantaneous transactions and low transaction costs. Any real estate owner can list his property or any fraction of it on the Platform, and anyone can become a buyer as the entry ticket is very low.

We are the first real estate tokenization project with a viable B2B marketing strategy. We will provide our solution to real estate developers, investment companies and brokers. As they are interested in any new sales channels, we can use their marketing budgets to promote our tokenization Protocol and quickly fill our exchange with tokenized real estate from all over the world.

Problems Solved

eGreenbacks Solve the Main Problems of Traditional Real Estate Investments

The total value of world real estate reached $217 trillion in 2015 and is worth nearly 2.7 times the global GDP.1 This number includes only developed real estate and would have been much larger had we counted the vast amount of undeveloped land around the globe.

Although the real estate market has plenty of opportunities for making big gains, investing in real estate is a lot more complicated than investing in stocks and bonds.

Several major problems and barriers persist in real estate markets:

  • High threshold for entry
  • Lack of liquidity
  • Slow and complicated process of ownership transfer
  • Lack of price transparency
  • Risks of fraud
  • High transaction costs
  • Complications of cross-border transactions

All of them have been addressed many times throughout history. New investment vehicles have been invented which solve some of those problems, but there is no perfect solution, and the real estate market is still the most inefficient one compared to other asset classes

Beneficiaries

Both Crypto and Traditional Investors Benefit From the eGreenbacks Solution

Real estate tokenization on blockchain technology is the next step in the evolution of real estate investment.

Our goal is to make our tokenization Protocol the industry standard for property tokenization. 

  eGreenbacks Direct Purchase Private Equity Public REIT Crowdfunding
Public Access X X   X  
Low Entry Ticket X     X X
Low Fees X       X
Liquidity X     X  
High Transaction Speed X   X X X
Price Transparency X     X  
Easy Cross-Border Deals X   X X  
Buyer can select property X X     X

Crypto investors will benefit from:

  • Access to real estate investment directly without leaving the crypto universe
  • New diversification opportunities between crypto and fiat exposure, which are especially in demand during downturns in pure crypto markets
  • The opportunity to buy real estate for personal use directly with cryptocurrency without conversion costs and access to foreign markets

Traditional investors will benefit from:

  • Access to a new class of asset previously unavailable to most of the population; the minimum investment threshold for investors is significantly decreased, democratizing the entire real estate investing market
  • Higher liquidity and price transparency, as tokenized assets are easily exchangeable and property tokens can be traded on our user-friendly Platform or anywhere else
  • Using jurisdiction-agnostic property tokens, enabling cross-border transactions and allowing people to purchase real estate in other regions beyond their domestic jurisdictions
  • Having a public market for every real estate property, which makes market pricing transparent and reduces information asymmetry between professional and retail market participants
  • Registering all transactions in single public blockchain, which will eliminate fraud and unintentional accidents related to conflicting ownership registries
  • The ability to easily buy and sell properties in pieces, which will not only make the market more liquid and efficient, but will also unlock entirely new possibilities for real estate owners; for example, borrowing money on the open market sing only a portion of their real estate as collateral
  • The opportunity to diversify their portfolio, not only between different classes of assets but also within the real estate asset class; better diversification provides higher returns at the same level of risk

Broad Audience Target

Solution Targets Broad Audience with Different Problems: Crypto Investors, Middle Class, Traders, Crypto Whales, and Institutional Investors

  • Crypto Investors Gain Easy Access to New Assets The number of people using cryptocurrency today has seen significant growth and rivals the population of small countries. It is impossible to know precisely how many people use cryptocurrency, but all the studies show that there are millions of unique active users, and the number is expected to grow exponentially in the next years.
    We see the growing demand from them for the diversification of assets to fiat exposure without leaving crypto universe. During downtrends in crypto markets protective assets are being especially needed. Real estate backed tokens are the best option to meet those needs.
  • Everyone Can Invest in Real Estate (Middle Class) Historically, the global real estate investment market has only been available to a small subset of investors. Large investment funds, corporations and high net worth individuals had almost exclusive access to this asset class. In addition, costs in real estate transactions can be as high as 30% of the property price, with many intermediaries earning up to 100% profit margins. This is not fair, and eGreenbacks will provide unprecedented access to the global real estate market for most of the population, who could not participate in this economy before.
  • Traders Identify Arbitrage Opportunities and Make Profit eGreenbacks makes no recommendations about any particular investment, but the Platform provides investors with tools, relevant information, market data, sponsor information, property information and third-party information. Traders will do their own due diligence and research when making decisions to buy undervalued tokens and sell overpriced ones. Higher liquidity and price transparency enables trading real estate like shares or bonds
  • Whales Buy Real Estate with Their Cryptocurrency Many early Bitcoin and Ether miners and investors have made a fortune. In addition to the motivation of all crypto investors to reduce exposure to crypto assets and diversify their portfolio, they need a convenient and low-cost way to buy expensive real assets. While a growing number of merchants worldwide are accepting cryptocurrency as a payment method, and there are some projects allowing customers to pay by card directly from a crypto wallet, those payments are limited in size. The eGreenback Platform will provide users with the opportunity to buy real estate all over the world for personal use.
  • Institutional Investors Increase Their Deal Flow and Earnings, Providing Others Access to Higher Profile Deals Institutional investors can increase their deal flow through virtually outsourcing part of their job to find lucrative real estate investment opportunities to eGreenbacks. Also, institutions can earn a higher return through negotiating special investment terms for being cornerstone investors providing a substantial part of the fundraising amount. It is a “win-win” solution as other investors are ready to give away a fraction of their return to gain access to higher profile deals. Also, the participation of institutional investors, who always carry out their own due diligence, increases the confidence of smaller investors that may lack professional investment expertise.
    The share of institutional investment in the real estate crowdfunding industry varies from 25% in the UK to 73% in the USA.
    The focus on institutional investors will allow the Platform to grow more rapidly. We expect that institutional investors will account for more than 30% of property tokenization.
  Traditional Option Flip-City
Transaction Costs 30% 2%
Transaction Time 1 Month 1 Click
Available Options Country of Residence Whole World
Entry Ticket $100,000 $100
Protection from Fraud No Yes
Ease of Use Complicated Transparent

Cases

Use Case: David Buys Fractions of Several Ocean Villas with Just $25,000

David is 37. He works as a manager in an IT company and is a typical middle-class man.

Currently, he is seeking to invest his savings of 25,000. David is cautious of risks because he is a father of two and rather reluctant to bet all his hard-earned capital on some opportunistic venture. He already has a broker operating on his national stock exchange. Now David is considering alternative investments to diversify his portfolio and to obtain higher returns at the same level of risk. He knows that he wants to focus on short-term rentals due to the soaring demand for Airbnb and other online marketplaces. David's wealth is not enough to purchase such property, and he is not allowed to invest in private real estate vehicles under his country’s laws he does not qualify as an accredited investor). The only option David can afford is REIT shares on the stock exchange. David does some research and finds out about their price volatility. Plus, in times of financial instability they’re just as vulnerable as his other equity shares, and there’s the possibility of asymmetrical pricing (the private market value of the underlying real estate can be several percent below what the trading value is). Also, he does not want to be a “blind” investor, unaware of which real property he owns.

Part of the reason eGreenbacks exists is to help David and other people struggling to access the exclusive world of real estate. With eGreenbacks, David figures out the best options available for him through the online

Platform. He selects several ocean villas in Indonesia, France and the Dominican Republic, instantly purchases their tokens from the secondary market within the Platform, and now owns a diversified portfolio.

David completes this miraculous transaction within one hour without having to bother about all the paperwork and legal issues he would have faced otherwise. He can sell his tokens anytime in the secondary market.

Use Case: Jin Fu Quickly Gets a Diversified Worldwide Portfolio Including a Penthouse in Miami

Jin Fu, an early Bitcoin and Ether enthusiast and investor, has accumulated considerable wealth, mostly by investing in cryptocurrencies. To diversify his portfolio and lock in profit from crypto asset appreciation, he wants to purchase real estate. He’s not an expert in real estate investment and does not understand how complicated and expensive the process can be.

He considers selling crypto assets for fiat currencies (several million US dollars or Euros) and investing them in real assets. After consulting with his lawyer, he finds out that he cannot withdraw his money from the crypto exchange despite complying with all its KYC and AML procedures, as his country does not have legislation that would allow him to confirm the source of income to authorities. Even if those regulations existed, or he used some legal loopholes or gray-area scheme, it would incur transaction costs of at least 5-10%, which pales in comparison to the possible taxation, and that would still not guarantee the absence of legal problems. There would be a huge fee just to withdraw the money, and the time-consuming process of purchasing real assets, involving new fees and other expenses, had not even started. He is reluctant to lose half of his assets’ value due to transaction costs. The only option to lock in the crypto profits he’s left with is to sell the cryptocurrencies and keep the proceeds in his account at a reliable digital asset exchange without any exposure to incomeproducing real assets.

eGreenbacks introduces a new way to get exposure to real estate. Jin Fu converts his cryptocurrency directly into eGreenback tokens in the same digital asset exchange. Essentially, he swapped his cryptocurrency for exposure to real estate located all around the world and producing income nominated in fiat currencies. Although eGreenback tokens are not backed by assets directly, they can be exchanged with property-backed tokens on the Platform at any moment. He reached his investment objective in a few minutes without any of the transaction costs described above. Later, he saw the apartment of his dreams in Miami listed on the Platform, and easily converted part of his eGreenback tokens into 100% of the penthouse’s tokens, making his dreams come true in one click.

Use Case: Recent Graduate Mengyao Finds the Way Around Structural Barriers to Invest in Lucrative Properties

Mengyao Lin, recently graduated and working as a specialist in the Financial Futures Exchange, has been there for a year now. He is a young but very ambitious investor, having already managed to build a diversified portfolio across all the channels available to him. As a financial advisor, he is aware of the fact that demand for real estate is huge in his country: the average price on the residential market in the capital has skyrocketed by 100% in just 5 years. He has accumulated just enough capital to meet the minimum 20% down payment for a mortgage set by the government last year. But even tougher new regulations have put Mengyao’s investment plan into question: now the minimum down payment has increased to 30% (if it was a second home, it would be 60-80%). He has a friend in a smaller city and considers this cheaper location. Unfortunately, the local government has made loan applications conditional on evidence of at least one year of tax returns in the city, plus evidence of residence and employment, making it impossible for non-resident buyers to invest in the market.

Totally frustrated, Mengyao approaches agents to learn about real estate opportunities overseas to get past the government’s restrictive policy. He’s offered the four most popular locations: Portugal, Australia, New Zealand, and Florida. Mengyao likes everything about the idea of investing in these markets, except for three things: 10% agents’ fees, plus the bulk of other expenses which can push transaction costs up to 30%, and now he needs an even bigger loan.

With eGreenbacks, he investigates dozens of lucrative real estate opportunities at home and overseas without redundant restrictions or prohibitive transaction fees. Through eGreenbacks, he is introduced to the blockchain and crypto worlds. He’s now able to create a sophisticated high yield portfolio. It turns out that Mengyao’s savings can get him exposure to several properties in his country’s capital, as well as all the overseas locations mentioned by the agent, which means he has a portfolio that’s diversified on two levels: geographically, and within each territory.

eGreenback Protocol Ready for Use

Protocol Is Ready to Use Within Current Legal Framework

eGreenbacks Tokenization Protocol Can Become Industry Standard

The eGreenbacks tokenization Protocol is a combination of smart contracts, technologies and legal structures used on the Platform and offered as a turnkey solution to the wide range of players in the real estate market.

The Protocol allows developers, brokers, investment companies and other property owners to access new markets and sell their property or raise financing faster and on better terms.

Broad Audience Target

eGreenbacks Real Estate Investment Structure Is Straightforward

  • Developers, brokers, investment companies, and any other property owners list their properties on the eGreenbacks Platform and/or their own websites for tokenized sale
  • Property-specific tokens are issued and sold to the buyers
  • Property-specific tokens are traded in the secondary market in the eGreenbacks Platform or any other exchange, or in peer-to-peer deals
  • All tokenization, transaction, management, and any other fees are payable exclusively with eGreenbacks tokens

 

 

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