Facebook’s long-awaited crypto-anchored financial marketplace may emerge as a game-changer for real estate when it debuts next year. The platform, powered by blockchain, could allow tenants to send the rent with a click of a button, and buyers and sellers to complete multi-million-dollar transactions in real-time.
But the real estate industry is notoriously slow to embrace tech, and Facebook’s announcement follows years of experiments with niche digital currencies, notably Bitcoin, an online currency that fluctuates like a speed diet.
“Landlords barely accept Bitcoin, now we are giving Facebook even more of our data?” said Zach Aarons, whose firm Metaprop invests in real estate technology companies. “I don’t think the real estate industry should be embracing that.”
Using its own cryptocurrency, known as Libra, Facebook’s financial system will be backed by national currencies, rather than the method used by Bitcoin, which can change drastically and is premised on a scarcity model. Facebook has already signed on dozens of partners, including Mastercard, Visa, Uber, Spotify, Paypal, Andreessen Horowitz and eBay, according to reports. Some of the partners paid at least $10 million to join the platform, trade publication The Block reported.
“If they’re doing actual currency, it’s awesome,” said Ben Shaoul, a developer, and the head of Magnum Real Estate who was among the first advocates of using Bitcoin in the real estate industry. He compared Facebook to a “real warm body,” or a company that people trust.
The popularity of online cryptocurrencies, including Bitcoin, has seeped into real estate transactions in recent years, though no one would argue they’re common. Shaoul, last year launched sales at his 81-unit property at 62 Avenue B in Alphabet City, and accepted Bitcoin as a form of payment.
Smaller transactions have also occurred. A brownstone mansion at 416 West 51st Street was listed last year for $12 million, a sum payable by Bitcoin. At another site on the Upper East Side, seller Claudio Guazzoni de Zanett listed his property $30 million. Potential buyers also had the option to pay $45 million in Bitcoin, a price hike he attributed to the volatility of the online currency.
It remains to be seen if Facebook’s new system — whereby a user essentially “buys” libra, which is backed by “real assets” — could launch with more traction. Attorney Shahriar Sedgh, of Manhattan-based firm Sedgh & Zuckerman, who has advised clients on the use of cryptocurrencies, said that the new financial system could be embraced by the industry if it remains tied to government-backed currencies.
“As long as [Facebook] could maintain the volatility of it, it could be a good alternative to using the dollar to pay for a standard lease or real estate transaction,” he said.
For some landlords, Facebook’s latest venture is a wait-and-see exercise.
“Landlords are usually slow adapters of technology,” David Schwartz, whose firm Slate Property Group owns multifamily buildings across the city and also develops condominiums. “You don’t want to be one of the first ones to do it.”