The digital currency market is gaining momentum - Guy Kleinbaum
# Entrepreneur of the Week Adv. Guy Kleinbaum # Post 5
On May 27, 2021, an anonymous buyer astonished the real estate world, when he purchased an Israeli venture called Alex Sapir, a penthouse apartment in the prestigious "Arta Surfside" project in Miami, worth $ 22 million, using digital coins alone.
Last September, another large crypto real estate deal was signed in New York, when a real estate company called Ben Shaul's Magnum sold a joint retail space of 3 stores on Manhattan's East Side, for $ 29 million, all paid for in Bitcoin.
These and many other deals prove that the digital currency market is gaining momentum all over the world, with digital currency market estimates currently exceeding $ 2 trillion.
There is no doubt that crypto is becoming more and more legitimate in the world and as payment through digital currencies becomes more and more acceptable, so too various institutional entities, including banks that are still very conservative and fear money laundering, will allow investors to pay through them and become legitimate means of payment in real estate transactions. Recently, due to a number of lawsuits and developments in the regulation, buds of this are beginning to be seen in Israeli banks.
On the one hand, the technological advancement of crypto, which streamlines and lowers costs for investors is welcome. On the other hand, one should know that trading in currencies and other digital assets, which is currently done without intermediaries, is a fertile ground for fraud. According to the blockchain information analysis company, no less than $ 14 billion in cryptocurrencies were fraudulently taken in 2021. Largely due to the increase in the use of distributed financing systems (DeFi). When losses from "crypto crimes" increased by 79% compared to a year earlier.
In addition to these, the crypto world is unsupervised and much money is laundered through it or used to commit crimes, which still creates a lot of bureaucracy in the various financial institutions and difficulty for the "little" man from the locality to use his crypto money for "standard" transactions.
In recent years, a new term has also entered the field of trade, "smart contracts", which is in fact a translation into the code language of various legal contracts, which will make it possible to implement various terms in the contract, related to transferring funds between parties, subject to certain milestones. In intermediaries, which will reduce costs to the parties and make the transactions hermetic so that the parties do not have the ability not to keep the promises of payment if the party entitled to payment has fulfilled its obligations under the agreement.
One of the purposes of smart contracts is to replace the trust institution with transactions and real estate transactions in particular. Although in our opinion at least, it is a model that will be less catchy because real estate transactions are very expensive transactions and during which large and significant sums are sometimes transferred money that people have saved all their lives, and people will have a very hard time leaving the machine, which operates binary according to black and white. Decide when and how the amounts in the transaction will be transferred, as we would not want a machine to judge us so in our opinion in matters of finance the vast majority will still want human involvement that can be influenced.
The big deals are everything except black and white. Already today we see quite a few times, that parties to real estate transactions come to court, due to various disputes regarding the interpretation of real estate agreements. Still, these are deals that involve a lot of emotions, disagreements and a different point of view, and it is difficult to see how a computer can address all of these and replace the trustee in a deal whose judgment in many cases is very important and even critical.
Another technological innovation that we are seeing that is slowly entering the real estate world is the possibility of purchasing real estate at the click of a button. Today the various banks and trading platforms in the market allow anyone to easily buy and trade stocks. In real estate, however, the adoption of this technology, is still slightly behind. Real estate is a more complex transaction in terms of registration, each country has its own registration system, the duration of the registration varies and there are all kinds of bureaucracies like purchase / sale taxes and more that require consideration, so it was not easy until today to set up such systems. Purchase real estate this way.
However, I believe and know that we are working with clients who are working on developing such platforms that in the very near future, we will start to see a steady increase in real estate transactions that are executed at the click of a button. After all, in recent years, any communication between people has become efficient and time-saving. Whether it's the transition from phone calls to WhatsApp messages or the transition from physical meetings to zoom meetings, whether it's data collection and comparison through various real estate sites. The option to buy a property at the click of a button can be seen today in the capital market, with trading platforms and banks allowing you to buy and trade stocks. A similar move, in my opinion, will also happen in real estate transactions and much thanks to Korna, which has transferred a great deal of the countries' registration activities that existed in the past to online and digitization systems. We already see this mainly in transactions led by the large and well-known funds and entrepreneurial bodies and in investments in regions and countries that are considered safer and more familiar to everyone. On the other hand, there are lesser-known areas or countries whose reputations are a little less good, where there will be no substitute for "boots on the ground" and recognition of every neighborhood and street.
The world is moving towards real estate platforms. Both the law and the professionals, like law firms, understand this.
Already today we, as a law firm, lend a platform that allows you to join an online capital hedge fund. In addition, we lend a few real estate funds, which allow through their website or through bid coordinators to make almost any investment, completely without paperwork. The site provides full explanations of all aspects related to the transaction, allows for electronic signing, identifying investors, transferring funds and more. As mentioned, I think this model will be more suitable for well-known companies, where investors psychologically feel more confident and can put their money more confidently, companies at the beginning of their journey will have more difficulty doing so today, at least until it becomes as common as online capital investment.
Today you can also see in the world and in Israel proposal coordinators, supervised by the Local Securities Authority, there are already some in Israel that we work and accompany, who mediate between investors and entrepreneurs, making fundraising much easier and simpler for those entrepreneurs and everything is done without paperwork and way Their platform.
On the other hand, even beginning entrepreneurs have technological innovations waiting for them. One of them is the online services, of which our firm is among the pioneers in the field. As part of this, the entrepreneurs receive digital services, which are especially suitable for the first stages of the project and their beginning as entrepreneurs. Starting from drafting and drafting founders' agreements, company opening agreements and documents, opening bank accounts, employment agreements, cooperation agreements, notarized certificates and more, all in a completely automatic manner. Today there are all kinds of sites that allow you to buy or edit such agreements automatically or semi-automatically, the innovation in our digital services is the involvement of our lawyers and our KNOW HOW in every agreement, and thus better suited to our client that most clients are entrepreneurs. , What the other sites do not do and actually provide a kind of general and unadapted template.
This revolution happened a lot thanks to the corona. Start-up entrepreneurs, on the one hand, need high-level legal services, but on the other hand they need them at a lower cost because they do not yet have the resources to own a legal department or enlist the help of a leading law firm in the field. Our online services allow for those entrepreneurs to "enjoy both worlds" and promote their business more efficiently and better and we as a law firm should also provide entrepreneurs at the beginning of their journey service due to the automation of the process and the ability to lower costs for them.
For entrepreneurs in more advanced stages, these services are already a little less suitable. They need closer and more humane accompaniment. "In the things that really matter, there is no substitute for humanity," said the presenter of one of the best-known banks in Israel and Justice. Because in the complex agreements that involve large sums, the developers and investors will want the accompaniment of a close attorney, this is something that is far beyond just the legal agreement it prepares. It's the experience, it's the different point of view, that has a significant added value to the real estate transactions and the intimacy required of the entrepreneur's secret man who is the lawyer that all the information that passes between the parties is protected by a client lawyer's confidentiality.
Finally, all indications are that the real estate world is moving towards technology, that is for sure. Technology can streamline processes, lower costs and make real estate transactions accessible to many more people, and I think that's a welcome thing. But on the other hand, technology may also open the door to fraud. Once you give up professionals like lawyers and accountants, who are supposed to be the "gatekeepers" of the transactions, the risk increases. I believe in finding a proper balance point, adopting the technology but not completely giving up on the gatekeepers. It is important to be careful not to be tempted by deals that look too good to be true, and yes, it is advisable to consult professionals, before you take significant steps that could cause the money you have saved for years, to go down the drain and make sure these platforms are monitored by various regulators. …
So tomorrow in my last post (yes, it's already over), I'll summarize the important insights and conclusions I shared with you this week, I'll share with you a fascinating personal story I went through during one of the transactions I took part in, and most importantly I'll allow you to ask me anything you want! Come on, see you tomorrow?
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