Episode Transcript:  

 Hey guys, so today we're gonna talk about what is Bitcoin like in plain English, how it works, and why, in case I've already started to lose you, why it's really interesting for real estate. Let's get ready to scale.

Hi guys. My name is Jeanette Friedrich. I'm the director of Investor Relations here at Blue Lake Capital, where we specialize in multifamily investments across the us. Now, typically, we're not Bitcoin people. We're not really in the Bitcoin game, but as a real estate investor, I am very excited about it.

And you should be too. So first of all, what is Bitcoin? So very simply, Bitcoin is a digital currency. You can't hold it in your hand like cash, but it really does serve essentially the same type of function. Now, it was developed in 2009 by either an individual. Or a group, nobody's really sure, but under the name of Satoshi Nakamoto.

Now I know that's really weird, and so you just kind of have to like get over the weirdness of that part and just kind of stay with me on this. So the reason why Bitcoin is so celebrated and you know. So confusing to some people is because it is exactly what I said, a digital currency. But here's the deal.

The big, big deal about this is that it's not owned by anyone. So it's not owned by a government. It's not owned by a company. It's not owned by an individual. It is a currency that is shared amongst the people. So it's a shared currency, it's a digital currency, and it is owned and operated essentially by people.

That's what makes it really different. Now how this is done makes it extra exciting and interesting to me. Especially it should for you also if you're a real estate investor. 'cause there's a lot of interesting impacts that it can potentially have on this industry. So first of all, what I'm talking about is the blockchain.

So what is the blockchain right? The blockchain essentially is where this Bitcoin is traded. But to simplify it even further and to make it easier to understand, I want you to picture this huge bulletin board and on this huge bulletin board. Nobody can come and take anything off of it. Nobody can come and change things around on it.

It's like a huge bulletin board that the Globe shares together. That nobody can frankly alter. Now, that is why it's such a big deal because that is what blockchain essentially is. Now, we already talked about the fact that nobody owns it, but it's really important because of the fact that since it's shared by the people, and since it's this huge bulletin board that nobody can change, it's really hard to cheat.

It's really hard to try to ever get around taking something off that bulletin board or changing things on that bulletin board. And so not only the fact that it's decentralized, meaning nobody owns it, but that it also has this incredible security that it provides. Is very attractive. So how do people actually use it?

Well, obviously I'm sure you've heard about people sending, uh, and receiving bitcoins and using transactions, you know, for that matter on the blockchain. Obviously that's how it's used. Um, and, but it gets a little bit more interesting than that, so. First of all, you probably have heard of the term mining and maybe you were like, me and honestly thought people were mining for Bitcoin, like they were looking for new Bitcoin or something, like trying to find new Bitcoin.

Um, that's not actually what it means at all. So when somebody is mining for Bitcoin, what they're doing is they're actually keeping the. Them true. They are verifying the transactions that happen on the blockchain by going in and basically buying some really heavy hitting, uh, computer equipment that actually runs these huge mathematical equations to verify that the transactions that have occurred on the blockchain are indeed legit.

And when they can prove that those transactions are legit, they essentially get to pin that onto the bulletin board and then are rewarded. In Bitcoin for verifying that transaction. So remember when I said it's run by the people? It literally, that's how it works, and because of the fact that people are able to verify these transactions and put them onto the bulletin board or to blockchain, then that actually makes it a much more secure way for transactions to be recorded forever.

All right, so just taking that into consideration here is where it gets really interesting. What does this matter to real estate investing? So first of all, some of the potential ways that we could start to utilize blockchain in real estate is first and foremost with property records. So instead of trusting the government or some county office to record your documents, like your deeds or your titles, potentially we could shift the industry over to.

Start recording these types of transactions on blockchain, which would make it impossible for someone to steal or to lose, or to forge or to forget. So that is one of the most powerful ways that we could potentially start using blockchain in real estate. And if you're like me and you're wondering, oh my gosh, that is genius.

Why haven't we started doing that already? I will be sure to put some information about that in the comments that you can find on our YouTube channel. We'll pin that comment up at the top and you can take a look to see why aren't we doing that yet, because it's a great idea. So another way that we could potentially start using blockchain in real estate is for what people call.

Smart contracts. Essentially this would cut out the middleman. This is where you can specify, uh, the terms of a transaction that can basically be checked off like a task list, and as those different terms are met throughout the course of a transaction that could automatically be captured and recorded in blockchain as opposed to having to have a lot of middlemen in the middle of a transaction or a deal that you're trying to get.

Closed. So not only would it be more secure and more transparent, but it would also be potentially a lot more cost effective. Now, the third way that we could potentially use blockchain when it comes to real estate is for tokenization. Basically, that means taking digital shares, if you will, of different real estate transactions and allowing people to participate in deals by buying just a.

Fraction of the overall deal as one of their digital shares or their token. Now granted, we already kind of do that nowadays with what we typically call a real estate syndication. However, the difference between the two is that in a real estate syndication, you are not liquid. In a tokenization model, you could potentially be liquid and share and trade those shares just like you do on the stock market.

So another huge, huge benefit potentially for real estate, thanks to blockchain. So there you have it. There's three ways that blockchain could really impact real estate. That, again, is securing property records, smart contracts, and also making tokenization possible. So why aren't people using it that way yet?

Well, because one, it's complicated and can be really confusing, which is why I wanted to make this video today to explain what Bitcoin is, how it works, how that con connects to blockchain, and why all of that has a lot of potential benefits for real estate. Second to that, there's a lot of potential regulation that might ultimately need to go into that right now that it doesn't have because it's not owned by any country government.

Or individual. So some people feel like if the government started to get involved and actually put regulations into place, it would essentially deteriorate the entire point of blockchain to begin with, um, and begin to compromise maybe the transparency and the security that goes along with that. The other issue too is that when it comes to mining, which you now understand is not looking for new Bitcoin, but it's actually.

Proving and validating the transactions that have occurred and pinning that up on the bulletin board to say, I confirm this is correct, and making that permanent secure record is very expensive and requires a tremendous amount of energy in order to be able to run those kind of supercomputers that they use when they are mining.

So that's kind of another problem, is that operationally and scale wise, maybe there's a cap to it. I don't know. Nonetheless, it does all come together to make things very interesting, to continue to monitor and see how it's all gonna play out. So what are your thoughts? Make sure to leave us some comments.

If you're watching along on our YouTube channel or if you're listening along, please don't hesitate to go find our YouTube channel. It's very easy, it's ready to scale real estate investing and let us know what you think. In the meantime, I hope you guys have a great week, and I'll see you on the next episode.

Ready to Scale is brought to you by Blue Lake Capital, where we hunt down the best multi-family investment opportunities that we can find and invite investors to join in with us. We target class B value, add multi-family properties across the Sunbelt. Our CEO Ellie Perlman, invest a substantial amount of capital into every deal.

This means our interests are aligned with yours. If you're an accredited investor looking to expand your portfolio and diversify sponsors, be sure to visit us@bluelakecapital.com. Blue Lake Capital, be bold, be extraordinary, and keep moving forward.