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The Future Of Blockchain with John Dean Markunas
I have John Dean Markunas. John is the blockchain advisor and business development consultant of Power of Chain Consultancy. John, how are you? Thank you so much for being on the show.
Willie, thanks so much for having me on the show.
It’s my pleasure. For those of you who might not know, I met John on an event which is called Blockchain & Opportunity Zones, Transforming Real Estate. We struck up a conversation. I’m glad to have him on the show. John, tell us a little bit about yourself. How did you get into this space?
The blockchain space is a big space. It started a few years ago. Let me tell you about my background. First, I have a 30-year background in real estate. I’ve worked in three different countries. I’ve worked in title insurance. I’ve worked with real estate developers and I worked as a real estate broker. I did appraising. I worked for six years in the title insurance business. In 2012 after leaving the title insurance business, I became a consultant in Brazil where I went to live with my wife at the time. I became a consultant for companies that are going into Brazil, looking for opportunities in real estate. Many of my clients were tech firms. I got involved with technology and real estate in Brazil in 2012. Four years later, I’m returning back to the United States and looking for other opportunities. What happened was I happen to find out about Bitcoin.
I looked at it and I considered investing in it. I did not, but what fascinated me was the underlying structure underneath Bitcoin which was the blockchain technology. That caught my interest and now it’s a passion of mine. Since 2016, I devoted 100% of my consulting business to real estate in blockchain, plus I’m an advisor to startup companies. I do business development for other companies who are trying to develop business clients globally. My company is called Power of Chain Consultancy. I’ve been working in four or five different sectors. Just to be specific, I’ve been working in the timeshare industry for a company out of Singapore, a timeshare in blockchain, commercial real estate, fractionalization, tokenization of commercial real assets, crowdfunding and also in the sector of land governance, land registry. My focus is on land registry and land governance globally.
I wanted to start with the business of blockchain. If you could explain in layman’s terms, why would any investor, let’s say at the beginning of the career or middle of the career or towards the end of the career. What I read about blockchain is fascinating but obviously, you’ve been in it much more than I have and know more about it. Can you explain more about blockchain and how can it help real estate investors?
Let me give you a general description of something which is good that has to do with the real estate industry in general, which is an extremely fragmented industry through all sectors. There is a high level of independent third-party vendors that work on transactions. Let’s take the example of buying a house. You have multiple parties involved. You have a real estate broker representing seller, the buyer and you have attorneys. You have a notary. You have escrow. You have a mortgage company. There are a lot of intermediaries involved which costs you time and cost you money in terms of the cost of buying a house or selling a house.
Blockchain is going to help streamline and eliminate some of these players are at least reduce their involvement to where you can compress the time doing a transaction from let’s say three to six months or six to three months down to a week maybe. That’s the efficiencies of it. Number two, it’s going to decrease the cost of doing a transaction. For buyers of real estate or investors, it’s going to create an environment where you can able to buy a property quickly, easily in a transparent and trustworthy environment. When we come to the point of tokenization in the fractionalization real estate, that’s where investors will get a big bang for their buck with increased liquidity for these assets they’re looking for.
That’s amazing because if you’re cutting out the so-called the middlemen. As you said, you have to go to the title company with the paperwork and the time involved. This could definitely have such an impact for investors and even probably people that are looking to buy a home to live in. This is a fabulous idea that you cut such so much time off the minutia of going from person to person, especially if you don’t have a team, John. You know how that could be, where you have to get word of mouth, “Can I find an attorney? Do you know the title company?” You know how that goes. That’s so much time-consuming. Where do you see blockchain going in the next three to six months? This is a fabulous opportunity for all of us.There’s a case of transparency that can be made for using blockchain. Click To Tweet
The next six to twelve months to a year is there’s not going to be a lot of mass adoption or a lot of movement. From my perspective, I’m looking at eighteen months to three years where we’ll start to see more adoption of it. The big issue here is education, that reached to real estate practitioners and investors. When you talk about blockchain, it’s a perfect technology for buying and selling, transferring ownership or titles. It’s perfect for crowdfunding and capital raising. It’s perfect for the construction industry and real estate development because everybody could be on the chain looking at the same documents at the same time in a secure environment. We’re still in the initial stages, so I’m saying eighteen months to three years will be the time period and we’ll see it will be a rocket ship.
For some investors, it couldn’t come any sooner but obviously, you being in this space, that definitely works. John, when you got into the field of blockchain, did you realize how impactful it could be?
When I first looked at blockchain, I read a lot about how blockchain is going to change the world. It’s going to eliminate all these intermediaries and so forth. It’s going to be a revolution. I’ve since changed my mind, I think it’s going to be more evolutionary in terms of its adoption by the various sectors, business sectors, finance, education and real estate. Since then I focused more on the practical applications of it. We had all the hype in the beginning and now we’re all realizing that blockchain isn’t through everything. It’s not a panacea for the world. It’s not going to cure cancer. It’s not going to feed the world. It’s going to be a transformation of businesses, industries, somewhat in an evolutionary way. Within three years, you’re going to see it skyrocketing and that we’re going to see mass adoption across the world.
Going back to trying to form a team and I’m not saying you’re not going to need people. Yes, you’re going to need people. I’m saying as you said, where it might take three to six months, this could be done in a week. That’s huge that you can’t put a price on it to cut so much time. Let’s talk about the government’s role in this. Is there any type of regulation that might come for it? Is the regulation in place? Where do you see that evolving?
When you mentioned government, I should mention that I’m a member of the Government Blockchain Association based in Washington, DC.
Talk about that please.
The Government Blockchain Association is an international nonprofit professional association. Its members, such as myself, focus on blockchain technology solutions to government. Within GBA there, it’s a global organization. It’s about 90 chapters worldwide. In addition, GBA has various working groups, which work on and research different sectors of government or what government interacts with businesses. All the way from cyber security, another working group is identity. Another working group is healthcare. I happen to be the chair of a working group called the Land Titling Working Group, which focuses on outreach to global land registry systems of countries with land registries and land governance.
I’ve had a good view through GBA on the role of government. The role of government is going to be critical for mass adoption throughout the world. The government needs to integrate with the private sector in order to move forward the blockchain acceptance by subsequent adoption and use in different aspects of government, as I mentioned in these working groups. In terms of regulation, that’s a big one. There’s a lot of legal uncertainty with a lot of aspects of that blockchain technology including smart contracts, tokenization and how you can sell to investors with SEC approval. There’s still a great deal of work to do in terms of regulatory and legal solutions to this emerging technology and its different components.
I wanted to backtrack a little bit because I’m definitely interested in the land title part of it that you’re a part of. Can you talk more about that or expand on that a little bit more?
Let’s take a look at what the land registry system is or they call it in the United States recorder’s office, which covers by county. A land registry system is a system by which matters concerning ownership, possession and other rights of real property are recorded and preserved or stored. They maintain records regarding the land and another real estate to properly assess its value and to collect property taxes. That’s what the recorder’s office is focused on essentially collecting property taxes. The land registry system is set up to promote internal competence between the people, commercial enterprises and the government. These documents and data that are recorded is usually the information that shows essentially the legal ownership and provides protection for landowners and property owners. Subsequent to that which is important is this provides us with a bundle of the rights as owners of the property.
We very clear and transparent ownership of something such as land and property. It allows us to do many things. It allows us to work with a mortgage on, it allows us to give it away. It allows us to sell it, it allows us to occupy and use it. It allows us to farm on it and mine on it, rent it or lease it. It provides us with an opportunity for economic development as a company. The problem here is about issues. There are a lot of pain points within land registry systems. Because the land registry is government-operated, there’s government bureaucracy without a doubt. There is a lot of paperwork. There’s a lot of noninteroperable proprietary software, that is land registry groups or even land registries which utilize vendors that their software does not connect with each other.
Without a doubt. There’s human error. There are incomplete and insecure property data that are recorded. There are inefficiencies in the systems and most importantly the number one issue in many places or countries is the issue of fraud and collusion. Did you know that the number one white-collar crime in the United States is mortgage fraud? That’s according to the FBI. Let’s take it a step farther along that thought stream. The case for blockchain is being made. I’m looking at these inefficiencies and pain points and challenges in the real estate industry from the land registry systems. Blockchain, without a doubt, provide us with the system that will increase privacy. It will help promote rights formalization. Blockchain use and land registry will help with the debt collection and analysis and the availability of data. It’s going to lower transaction costs. It’s making a case for blockchain use and land registry systems, I think it is one that you can manifest quite easily.
I don’t want to put words in your mouth. It could be said that a blockchain transaction could be more secure than obviously a mortgage transaction. What I hear with the white-collar crime of mortgage fraud and we always read stories about it and magazine and such. It seems that a blockchain transaction could be a safer bet for now. Am I off base on that?
It’s the perfect bet. In fact, the blockchain is providing an environment, a real estate transaction or subsequent recording of documents related to it such as a deed or a land title. It will help provide an environment where the information block by block is immutable. You can’t change it. You have to add new information in order to do change something that happened in the past. It’s completely trustworthy. The cool thing about it is it can be looked at or viewed just about by anyone. There’s a case of transparency that can be made for using blockchain. In other words, if I want to look at a real estate transaction or as an investor look at a purchase that I’m making an investment and you’re using blockchain, you can see that real information time on the blockchain. You can see what information is being put on there, who is putting it on the blockchain. If there’s anything wrong or if there’s an error that needs to be rectified, you can go back to the individual or the vendor who’s providing that service. It could be an appraiser, a notary or the seller. You can ask to make changes along the way. It’s going to be a terrific environment to be able to transact quickly with transparency.
That’s the key to be transparent because talking about mortgage fraud, it can get tons and tons of people away from trying to work with a mortgage broker or anything. I love the fact that this could be transparent from the get-go. If I’m looking to buy a property as an investment property, can I find a blockchain company or let’s say I talked to you or whoever, I could get that transaction started and from there I just go get the property, get the paperwork is done and it can be done within a week or so? Can I start my investment if that makes sense?
Yes, let me back up there. Are they vendors or startups out there that are providing new services for purchasing property both residential and commercial?
The industry isn’t as mature quite yet, I don’t think and this is my opinion. When you ask, can you start using blockchain and take advantage of all of these benefits? I don’t think the industry has fleshed out the potential quite yet. They are still in the startup phase. There are companies out there that do provide these services, but I don’t we’ve gotten to the point wherew are an investor and you work with a lot of investors and you invest yourself. If you were looking for the optimal platform that uses blockchain for investment purposes or real estate, you could find them, but they’re still working out the kinks of the systems. In other words, when I mentioned decreasing the investment purchasing time from three months to a week. I don’t think we’re quite there yet. It’s going to take eighteen months to get to the point where we can have all the information online. You can do your due diligence in a few days and transact in a few days. It’s getting there though.Blockchain is going to help streamline and eliminate some of the intermediaries. Click To Tweet
I think it’s a start where we could work with people in this industry and the blockchain industry. I feel that with what you said before, you have the paperwork involved, the intermediaries vulnerable to fraud like I mentioned about mortgage fraud. If this could solve that issue, the blockchain, how easier transactions can be. How many more people that are looking to buy a home can get into a home or at least start the process because of blockchain is where it could be in the future.
It’s getting there and it will be there soon. There’s another aspect of this and that’s called tokenization or the fractionalization of real estate. This is going to change the investment world quite dramatically. There are companies out there that are doing this. It’s providing asset tokenization for real estate, which means you’re actually fractionalizing and breaking up the property into shares or fractions. Each fraction represents a token, so it’s called tokenization. With tokenization and fractionalization in real estate, you can break up a property in smaller pieces, which won’t be available to smaller investors at a much lower threshold of getting into a larger property in terms of its value.
For example, let’s say you have a building that’s worth $1 million. It’s an office building. If it’s fractionalized or tokenized, that building owner can use a vendor to sell tokens or fractions to individual investors geographically, locally or nationally or internationally at much lower prices. Instead of an investor coming in and having to finance $500,000, the small investor, any investors can come in and purchase. It depends on the owner who wants to establish the minimum price. You can come in at $1,000 and buy $1,000 of that $1 million property. That’s what essentially is a token. That opens up a huge market and it creates liquidity from the market. It creates efficiencies. It provides a way for individuals to invest who would not have been able to do before because of the high price levels of real estate.
It’s giving in the small investors someone that might not be accredited a chance to invest in a building for $1,000, $500 or whatever it could be. I think that’s a great idea, John. You’re giving people a chance to have their money work for them for a change.
What happens is they’ll have all the rights and benefits of owning that property with buying a fraction of a property. You will indeed be receiving revenues from a rental stream from that property monthly or quarterly through the fraction you bought. You have an income stream from that property that you’ve invested in and you have the opportunity to capitalize on the increased value of the property later on when you sell your fraction or your token. Tokenization is going to change the world without a doubt.
I could see it will because you’re giving everybody a chance to invest in a project. We talked about FIBREE. Can you talk more about that?
FIBREE is the Foundation for International Blockchain and Real Estate Expertise. It’s the leading international network for blockchain and real estate experts and people who are interested in real estate and blockchain. It’s nonprofit and it started in Europe. It’s international. It’s basically set up to exchange knowledge between the real estate industry, participants and blockchain technology. It’s a huge network. It’s based in the Netherlands. They have several chapters in Europe, Southeast Asia and the Asia Pacific. The United States got started in 2018. FIBREE has five chapters in the United States: Chicago, Portland, Southern California, Philadelphia and New York City. In fact, I’m the co-chair of the FIBREE New York City chapter. When I talk about education and outreach, this is what FIBREE does. It brings blockchain and real estate together, but it brings it out. It pushes it out and educates people all over the world about what it is, how it works and the benefits and the value. That’s something that you’ll be hearing more about in the future.
Do you have any upcoming projects that you’re involved in, any speaking engagements that we could definitely promote?
In fact, as many people know and many people don’t know, the week starting the 14th of May is what’s called Blockchain New York City. A week-long festival, a plethora of conferences and symposiums and seminars. It’s co-sponsored by the New York City Economic Development Corporation. In fact, one of the conferences that I’m involved in, it’s called ASD Token Conference. This is actually a panel that I organized. I put together four or five real estate experts and blockchain experts on this panel and I’ll be moderating it.
John, what would you suggest for my audience to learn about blockchain? What’s the best course of action?
There are a couple of ways to go about it. One is simply to Google blockchain. That’s what I did. You’ll come up with the surprisingly huge amount of information on blockchain, but you need to narrow it down to what you might be most interested in. If you’re new to blockchain, Google it and look at some of the sites that talk about what blockchain is and get a feel for it. Let it soak in. If you’re in a particular industry, Google that industry, blockchain and real estate, blockchain and healthcare. That will help you dig a little bit deeper into blockchain and its functions and its utility within that industry that you might be interested in. Another thing that I’ve done are books. Don’t forget books. I buy books. I have about ten blockchain books on my desk.
One of the first ones I bought was Blockchain For Dummies. It’s a great introduction. It sounds basic. It is, but it’s a great way to get started. The other book I have is Artificial Intelligence For Dummies. The blockchain uses artificial intelligence for a lot of its functions. Another book I bought, the first ones that came out was a book by Don Tapscott. He was a best-selling author of Wikinomics. He wrote a book called Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World. For newcomers to blockchain or those who are still researching it, the internet is a great place and don’t forget to buy some books and do some reading in your spare time.
John, if somebody wanted to get in contact with you, what’s the best possible way?
My email’s probably the best and that’s JMarkunas@PowerOfChain.com.
John, thank you so much for being on the show. I appreciate it.
Thank you so much for the invitation. I enjoyed it.
That was John Dean Markunas of Power of Chain. You could find John at JMarkunas@PowerOfChain.com. Also, John is a blockchain advisor and business development consultant. John, thank you so much for being on the show. If you go to Peer 2 Peer Real Estate Podcast on iTunes, please subscribe, leave a review. Tell us how we can make the show better. Remember to live out your dreams. Don’t let anyone talk you out of what you want to do. If you have that career in mind as a goal, go get it. If you have that entrepreneurial spirit in you, go get it. It’s your life, live it the way you want to live it. Thank you so much for following the show. Until next time, thanks and have a great day.
- John Dean Markunas
- Government Blockchain Association
- Land Titling Working Group
- New York City Economic Development Corporation
- ASD Token Conference
- Blockchain For Dummies
- Artificial Intelligence For Dummies
- Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World
- Peer 2 Peer Real Estate Podcast – iTunes
About John Dean Markunas
John Dean Markunas is a real estate industry blockchain advisor and business development consultant. He is the Principal Consultant with Power of Chain Consultancy, a blockchain advisory firm. His current work focuses on four distinct sectors; property title insurance, the timeshare industry, commercial real estate fractionalization investment and crowdfunding with a special focus on land registry systems, title recordation and land governance.
Mr. Markunas has over 30 years of commercial real estate experience including real estate development, brokerage, appraising, and title insurance focusing on the U.S. and Latin America markets. Outside of the U.S. he has lived and worked in Mexico and Brazil.
John is an enthusiastic, advocate and supporter of blockchain technologies. He is a member of FIBREE (Foundation for International Blockchain Real Estate Expertise) and the founder and co-chair of FIBREE’s New York City Chapter.
John is also an active member of the Government Blockchain Association (GBA) and is the Leader of GBA’s Land Titling Working Group. The Land Title Working group explores blockchain technologies to address land titling and land registry processes around the world. The Group members identify and study real estate use-cases, pilot programs and other solutions deployed in a variety of countries with the goal of reaching out to government institutions on municipal, state and federal levels to 1) educate, 2) recommend and 3) consult and assist with the implementation of blockchain solutions in their respective jurisdictions.
Mr. Markunas has a BS degree in Business Administration from Florida State University. He also holds an MBA in Finance and Marketing from the University of San Francisco, CA.
He is fluent in Spanish and Portuguese.