Detailed Plan
Real estate is an asset class that continues to prove itself as one of the most consequential investments and therefore agreements an individual will ever enter into in their lifetime.
Buying a home, is supposed to be an exciting time. However, the very nature of real estate transactions—large amounts of money transferring between parties—makes them a prime target for criminals.
Increasingly, financial institutions and home buyers are falling victim to wire transfer scams connected to real estate closings. According to a warning issued(opens new window) by the Federal Bureau of Investigation, the number of fraudulent wire transfer scams reported by title companies and closing agents to the FBI's Internet Crime Complaint Center(opens new window) increased by 480 percent between 2016-2021. In 2020 U.S. real estate transactions alone losses to wire fraud totaled more than $213 million. This type of fraud was reported in all 50 states, and is a globally prevalent issue facing real estate transactions.
What makes this type of scam so enticing to criminals and easy to pull off is the nature of the real estate closing process, which is often hurried, and the fact that email is a commonly used method for providing legitimate instructions for sending funds at closing.
Here is how the fraud works:
A fraudster hacks into a title company or lender's email server or computer system to search for upcoming real estate closings; and
The fraudster then emails the buyer or financial institution with bogus wire-transfer instructions related to a particular real estate loan closing.
The buyer or financial institution then follows the bogus instructions to generate the wire transfer request. Once the funds are sent, the criminal moves on.
Unfortunately, this fraud is usually only discovered when the title company or closing agent informs the buyer or financial institution that they did not received the anticipated funds.
Lending protocols are reliant on centralized, faith-based systems of due diligence when qualifying a buyer for a transaction. This can lead to inefficient outcomes when a buyer pulls out of a transaction after they have been qualified for a purchase due to unforeseen financial circumstances. The Seller is reliant on these same faith-based systems to rest assured their property sale is moving forward, compounded with the outdated, centralized methods used to store and verify their property records and ownership rights.
Artifact is a solution that gives Sellers in a real estate transaction a method of easily verifying their records and rights to a potential Buyer via an "escrow" tokens while giving a Buyer in a real estate transaction a more direct way of funding real estate transactions with a "funding" token without using wire transfers.
With the ultimate goal of providing decentralized methods and real-time solutions to buyers and sellers of a real estate transaction, Artifact aims to be 'square 1' in the blockchain real estate revolution. With adoption and interest accelerating with every market cycle, digital assets promise to disrupt the real estate industry, but before peer to peer, transparent and law compliant real estate transactions can take place using blockchain technology, a solution like Artifact must be developed to facilitate and verify the transaction and real property data.
use cases include:
create efficiencies by verifying and updating buyer's qualifications to purchase property in real time.
increase consumer/marketplace competency by encrypting fundamental property rights (variations of the legal definitions of "possession, control, exclusion, enjoyment, and disposition"
increase consumer/marketplace fidelity by encrypting the documents that connect the property owner to the property itself: deed, liens, chain of title, mortgage records, etc.
create transparency and increase identity by offering a decentralized method of publicly recording and verifying property owner's records/rights to reduce marketplace fraud
create efficiency for the future purpose of offering decentralized marketplace functions powered by NFTs for buying/selling/exchanging real property using smart contracts offering consumers more control over their property
Who We Are:
Blake McNeal- Real Estate Industry Stakeholder, Project Guide
Mark Moore- Plutus Pioneer, Workflow Consultant
Vincent Brandon - Blockchain, Technical Development Advisor
Randall Harmon - Smart Contract Expert
How Artifact "Funding" Tokens operate:
Buyer Side) Aligns seamlessly with traditional lending and brokerage firms to refer buyer clientele in order to mint "funding" tokens for Buyers in real estate transactions. This product will increase transaction efficiency and transparency by using blockchain technology to verify and update financial due diligence in real time all without breaching personal privacy of the buyer. The Token won't need to harbor personal data to update and verify that the buyer meets the lender's minimum risk profile in real time because the token will only broadcast the signal of the state of the relationship between buyer and lender. As well as disbursing funds directly to escrow tokens without the need for wire transfers.
Artifact "Funding" Token process:
-Buyer identifies property to buy
-Buyer works with lender to submit documents defining lender's due diligence (i.e. proof of buyer's income, proof of buyer's assets, proof of buyer's credit history, proof of buyer's identity)
-Artifact works with lender and/or broker to encrypt Buyer data using Artifact and issues buyer Artifact "Funding" Token that serves as a real time "green light" indicating a qualified state, helping qualified buyers compete in hyper competitive markets and helping sellers verify the most assured offers for their property.
-Buyer enters into contract with seller.
-Smart contract is established, defining the relationship between the Buyer's "Funding" Token with the correlated Seller's "Escrow" Token and funding is distributed according to the agreement.
-Transaction closes
Funding Token Tech Development Goals:
milestone 1- Develop lender client facing application where Tokens are minted
milestone 2- Develop smart contract capabilities that communicate Buyer performance.
milestone 3- Develop public and private keys for updating lender due diligence records.
milestone 4- Audit security of smart contract and fluidity of data streams.
milestone 5- Commercially launch Buyer client facing application
Funding Token Operational Goals:
milestone 1- Voters elect to successfully fund Artifact from catalyst fund 7
milestone 2- Sign deal with commercial and residential mortgage lenders and brokers
milestone 3- Verify funding for 10,000 transactions by end of Q1 after launch
milestone 4- Raise subsequent funds for further product development and marketing
milestone 5- Verify funding for 100,000 transactions by end of Q1 after launch
milestone 6- Sign deal with commercial and residential mortgage lenders in every state of U.S.
<u>Escrow Token</u>Aligns seamlessly with real estate escrow companies on the acquisition/disposition, origination, refinancing and entitlement of real property to encourage adoption by allowing the buyers and sellers to elect to encrypt, and therefore, represent their property records and rights onto the Cardano blockchain with "Escrow Tokens". These tokens will map the ownership structure in the real world onto the blockchain that will not only securely prove the property owner's entitlements but also give them an instrument that can receive payment at closing. Providing one small step toward a peer to peer real estate transaction that has the integrity and quality of a boutique commercial transaction. Property owners can elect to mint their property's Escrow Token at acquisition of property through Artifact's client portal, or elect to mint at any time during ownership via client portal.
How are "Escrow Tokens" represented in the county clerk or public records office?
It is increasingly well known how NFT's are technically represented on the blockchain, but it's very obscure how they might technically be represented in legacy governance/market systems.
We are designing the "bridge" between the world of smart contracts/ledgers and the world of papers/files using consensual liens.
Upon electing/consenting to mint a Token for your real property, the Token would be represented as a "consensual lien."
On the blockchain, the "Escrow Token" represents all legal abstractions of the unit of real property that connects the chain of title, financing records, ownership rights and current deed with the current owner/ownership structure of that property.
In the local county clerk's office where property records are stored and verified, a consensual lien agreement will represent the Token, meaning that the property cannot be sold or transferred to any other owner without the consensus of the lienholder(s) and/or the satisfaction of the terms of the lien (This right is fully realized when the property is unencumbered)
Escrow Token Tech Development Goals:
milestone 1- Develop escrow client facing application where Escrow Tokens are minted
milestone 2- Build out user interface and polish front end development
milestone 3- Test backend development and audit security of consumer facing token custody system
milestone 4- Commercially launch escrow client facing application
Escrow Token Operational Goals:
milestone 1- Voters elect to successfully fund Artifact from catalyst fund 6
milestone 2- Sign deal with our title company client that provides Artifact escrow token minting to title offices in 30+ U.S. states
milestone 3- Mint 10,000 Escrow Tokens by end of first quarter from launch
milestone 4- Raise subsequent funds for further product development and marketing
milestone 5- Mint 100,000 Escrow Tokens by end of second quarter from launch
milestone 6- Sign deals with more title company clients that provide escrow token minting to title offices in all 50 U.S. states and identify other nations to deploy our solution.
*Relationship is in place with large nationally certified title company who is ready to become our first client for phase 2.
Three Month Goalpost:
Complete research, publish White Paper with code used to define Token minting process and smart contract utilities for Funding and Escrow Tokens
Six Month Goalpost:
Launch token minting operation and contract services in clients in all 50 U.S. states.
One Year Goalpost:
Educate and expand into real estate markets abroad.
Conclusion: When the methods of verifying Buyer qualifications and representing Lender due diligence as well as offering Buyer's the ability to directly fund real estate projects without wire transfers are decentralized and rolled-up via Funding Tokens coupled with decentralized methods that verify Seller property records and rights are rolled up via Escrow Tokens, a real estate marketplace powered by blockchain can function and be exposed to the innate creativity and value inherent in decentralized, peer to peer markets.
