Sam Tabar, who co-founded Fluidity — a year-old startup in Williamsburg that offers tokenization technology to broker-dealers and financial firms — wants to shake up the investment business.
But he said promoting such a novel financial tool in the often-staid real estate market can be a challenge, even if it’s meant to relieve several ills. That includes eliminating “middlemen,” such as lawyers and bankers, by utilizing smart contracts on the blockchain.
“There are going to be vested interests against this, because there are people who don’t add value to a transaction,” Tabar said. “They haven’t built a building, they haven’t sourced a deal. But they make money off being the friction agent of a transaction.
“What about lawyers?” he added. “Do they add value to a deal? Not at all. The technology makes lawyers redundant. They are no longer needed.’’
That, of course, raises the question of whether blockchain service providers are becoming the new intermediaries. But Tabar maintained that Fluidity, which built a peer-to-peer platform for trading on the Ethereum blockchain, is far from a go-between — it’s a way for firms to use blockchain technology in compliance with securities regulations.
Still, crypto and blockchain proponents often run into a problem in New York real estate where “the devil you know” is usually seen as better than the one you don’t. “Unfortunately, the devil you know is truly worse,” he said.
Over time, though, real estate will inevitably migrate to the blockchain, since the technology provides multiple benefits, even if the values of cryptocurrencies fluctuate, the Fluidity co-founder argued.
“We all remember the 2001 dot-com crash,” Tabar said. “There are going to be risks with any nascent asset class, but the underlying technology works.”