It's easy to feel right in hindsight -- to have "known" that ride sharing would catch on, that residential home stays would catch on, that Amazon would account for 50 percent of all online retail... in hindsight, what once seemed improbable seems like a no-brainer.

What's exponentially harder is accurately predicting the future.

Or, at the very least, knowing which predictions will turn out to be accurate.

One person you shouldn't bet against is Stephane de Baets, the founder and owner of Chef's Club, a restaurant group that features a rotating residency of chefs at locations around the world. He's also the founder and President of Elevated Returns, an international asset management firm that controls over $1 billion in hospitality-centric commercial properties in the U.S., Europe, and Southeast Asia. 

Including the St. Regis Aspen Resort, where Elevated Returns facilitated the first major commercial real estate transaction using blockchain technology to sell 18 million digital securitized tokens to investors who now collectively hold an 18 percent minority ownership in the property. And Stephane recently announced plans to tokenize the entire Elevated Returns portfolio of real estate assets using the blockchain technology Tezos.

Why? Because, as you'll see from our conversation, he believes the future lies in the disintermedation of asset classes.

Predicting is easy. Being right... so why what are sometimes known as "security tokens"? And why now?

In my lifetime working lifetime, I've seen two fundamental technology revolutions that resulted in massive wealth creation.

The first was the Internet. I was too young and not well-connected enough to take advantage. The next wave was social media and social communities. I didn't believe in it... and watched that wave pass by, too.

But now the transformation from paper to digitization and dintermediation of asset classes... the perfect wave is coming. 

Forget about the hype behind crypto, digital currency, etc. The technology powering the transformation will help people do what they already do cheaper, better, faster... and they probably won't even realize that they're using crypto. I

It's not a revolution, but an evolution. Like fax to email: All email did was make communication faster and better, creating interactions that were impossible over a fax machine.

I've never invited someone for a drink over a fax. But I do that all the time over email. Without caring how it works.

Or what the underlying technology might be.

So as with most technologies, the tool itself is far less important than what it allows you to do.

People want disintermediated processes on many levels. Real estate investing is just one of them. Airbnb and Uber are disintermediation: They're simply platforms that connect users and asset owners.

But in capital markets and real estate... there hasn't been a proper revolution in investing for the past 25 years. While REITs (real estate investment trusts) created a new wave of cash flow into real estate, still: Even though the real estate asset class is worth around 240 trillion dollars, there has been no true technology revolution in the asset class. It's long overdue.

A true peer-to-peer exchange of value, global exchanges, the ability to change the relationship investors have with real estate... seeing real estate as a value class rather than just a roof over their head... that shift in thinking is long overdue.

Let's say you're right. Even so: Being a pioneer is a long crusade.

In the U.S., put digital, cypto, etc., together in a sentence and people think you're going to scam them and steal their money. (Laughs.)

It's a question of doing it the right way, with the right partners, delivering on your promises, and realizing that market adoption will take some time.

But whenever there's a time lag between today and what is inevitable... that gap is opportunity. 

The question everyone asks is, "Where will the liquidity come from?" We believe that liquidity will come from A) the size of the market, because the bigger it is the more liquid it will naturally be, and B) the fungibility of the instrument.

When you can actually pay for a product or service precut and service using an asset-based token... the minute that happens, the token will be hyper-liquid because people will understand they not only have a fungible asset, they have an asset in their pocket that can appreciate instead of depreciate.

That's the key to widespread adoption. And it's coming.

The same premise would extend to any kind of investment. The fewer the barriers to exchange...

If you are an investor and want to buy an instrument in a foreign country, you need to set up an account with a brokerage, transfer money from your bank to the  brokerage, put in your order, wait 3 days for the deal to settle...  it's ridiculous.

Put yourself in the shoes of a foreign investor. If you sit in Singapore, how do you buy a fragmented interest in a U.S. property? You have to open an account with a U.S. broker. Send them money. They'll charge a fee... 

Today you have instruments with multiple regulatory bodies that trade on multiple exchanges.

What technology allows is the ability to create a smart contract with multiple jurisdictions.

That will be the true revolution.

I've spent 22 years in Asia. Everyone is using a MacBook, listening to Spotify, communicating on Whatsapp... yet no one owns a share in those companies because it's not accessible to them.

A portable smart contract will result in less friction -- and will make investing in a variety of asset classes accessible to everyone. Any player within the ecosystem will be able to transact with a currency that is fungible.

Which means that type of ecosystem could apply to a variety of markets and industries.

The relationship between the consumer and an end product is linear.... but there are multiple layers of intermediaries. The right ecosystem will create a direct connection between the consumer and the product or service -- with no intermediation. 

That's a much better way of connecting all stakeholders. We call it the contributing economy: The more you connect to a marketplace, the more the marketplaces connects with you... and pays you back.

Global markets will feed sub-markets... but you will connect to one marketplace. And instead of just being a consumer, you can also be a shareholder.

That's the perfect wave. And it's definitely coming.

Published on: Jul 23, 2019
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