DeFi has changed the world already, in just the short time that it has been around. Blockchain in general has and will continue to revolutionize world finance. For the future of floating cities, we will need a better system of tracking ownership than just (paper) titles.
Titles come with a whole host of problems, they can be lost, burned, torn, destroyed, physically stolen, or made fraudulent copies of. Many people think that fake titles of ownership are usually problems that face cars more than homes because it is difficult to claim you are the owner of a home that someone else lives in even if you produce a document stating you are. But often such documents are produced and given to banks to take out loans against someone’s house, and the real owner doesn’t find out until repayment comes due. This is referred to as title theft and it has caused some people to risk losing their homes without them ever knowing the fraudulent transactions were taking place. Floating homes may face problems of both stolen cars and stolen titles as they will be far more mobile than homes built on land, and will be able to move from place to place easily, and maybe even across oceans, so having a well-tracked system of ownership not reliant on local government is paramount.
In floating communities built by Arktide, seastead ownership and business dealings related to said ownership, will be tracked on the ARKT blockchain, which will be a custom blockchain developed by Arktide. Here, we will be able to track and fund people’s mortgages, monthly rentals, vacation rentals, and other business dealings related to their property.
In the past, you had to go to the bank and apply for a mortgage to buy your home, that may still be true for some time, but many cryptocurrency developers are working on projects to also allow the open crowdfunding of people’s mortgages. Now how exactly would something like that work? Let’s imagine that a seastead only costs $100,000 in the future when prices come down significantly. Here is an example:
- Mitchell one day decides that he wants to buy a home, and will need to take out a mortgage for Arktide to build one for him.
- Mitchell pays $20,000 to Arktide.
- Arktide generates 80,000 mortgage tokens and sells them off on DeFi for $1 a
piece, this will be to cover the remaining $80,000 needed.
- Ben buys 50,000 of these mortgage tokens, the rest going to other investors
- Arktide now has $100,000 in funding
Great! We can now begin construction of the new unit, and soon Mitchell will have to start making monthly payments back to the mortgage token holders, to pay them back for the loan he just took out using their money.
- Ben has a token that expires on the 1st of March
- On the 1st of March, $1.02 is pulled from Mitchell’s crypto wallet, buying back that
- Ben has another token which expires on the 1st of January 2052
- On the 1st of January 2052, this same contract will fire, and continue until all
mortgage tokens are bought for their new cost after interest is factored in
- The same schedule could also be changed to accommodate 20-year mortgages or mortgages for shorter or longer terms
- Once no more mortgage tokens remain, the investors have been paid back with interest, and Mitchell’s home is fully paid off.
At the same time that these mortgage tokens are minted, a wallet owned by Mitchell is given an ownership NFT, his owning of that wallet proves his identity in disputes over who owns the structure. As long as he has this ownership token, he will have the right to live in the seastead, move it, rent it out, or do anything else to it that he wants.
Other functionality will be built into the ARKT blockchain to allow the owner to easily work with property management companies in sharing profits from vacation rentals, monthly leases, annual leases, room rentals, or any other type of arrangement that might exist, and organizing what tenants can stay where and what rights they have to the property. This system can be handled by property management smart contracts, rental tokens, and other systems that we can go into more depth on later.
Such a system will allow the full decentralization of the entire real estate process, from crowdfunding mortgages to decentralized titles to being able to set your new property up on an AirBnB-like app, in this version of events, no red tape or mishandling of paperwork can slow the process down for new real estate to be constructed quickly and used efficiently. It opens the floodgates to newer and higher quality housing and paves the way for prices in the future to be lowered to such a level that everyone in a floating city will be able to own their own home, a problem that can’t easily be solved on land in most countries either because of zoning laws or complications in land ownership titles. With these kinds of systems to look forward to in the blockchain space, maybe sea real estate will only be the first area of real estate to be tokenized, but after proving itself here, the tokenization of real estate on land may become popular as well, paving the way to homeownership for billions of people.