Brickblock: Connecting Cryptocurrencies with Real-World Assets (2024)

On June 6th, the combined market capitalization of cryptocurrencies soared past $100 billion USD. It’s no wonder, then, that investors are taking note of the opportunities presented by this rapidly expanding digital economy.

But for all their promise and progression towards mainstream adoption, cryptocurrencies carry a high degree of volatility. One glimpse at a price chart of any given cryptocurrency is enough indication of their turbulence.

Simply put: investing in, trading, and holding cryptocurrencies presents a far greater risk than traditional investments. Cryptocurrencies also suffer from being perceived as intangible — institutional investors are looking for concrete assets that have a real world footing.

That’s where Brickblock comes in.

Brickblock is a tool for traders and all other cryptocurrency holders who wish to diversify their portfolio and hedge against the volatility of cryptocurrencies. Its platform allows people from all over the world to invest their cryptocurrency into real world assets across three types of funds — Real Estate Funds (REFs), Exchange Traded Funds (ETFs), and Crypto Funds (CFs) — without first exchanging into fiat currency. Furthermore, investing through Brickblock is cheaper than ordering ETFs and REFs through a securities account at a bank as its peer-to-peer platform voids many of the fees associated with traditional orders.

Crypto Funds (CFs)

Crypto Funds are split into two groups: actively managed CFs and passively managed CFs.

In the active CF section, Brickblock will provide closed-end funds like Taas with the possibility of offering their funds to the public. Fund managers can apply to manage the funds of investors by selecting specific cryptocurrencies, day-trading, and taking profits out of diversifying portfolios and active distribution of funds.

In the passive CF section, Brickblock will only accept institutions that offer rule-based indexes. One of these could be Top 10 Cryptocurrencies, for example (tracking the value in the same ratios as the index itself). Since there are no passive CFs yet, Brickblock will introduce a system based on passive ETFs.

Exchange Traded Funds (ETFs)

Unlike actively managed funds, the fees and costs of ETFs are significantly lower since they track rule-based indexes like S&P 500, Nikkei or DAX. ETFs can also track commodities like gold and silver and have the advantage of being offered at near-wholesale prices without a minimum amount. By choosing their preferred fund, an investor can actively decide in which market they want to invest and therefore hedge risk in another industry sector.

Real Estate Funds (REFs)

Real Estate Funds, Real Estate Investment Trusts (REITs), or Real Estate Crowdfundings are entities actively managed by a fund manager who acquires a certain volume of real estate in certain cities, countries or continents. Brickblock’s platform lists real estate projects with high potential, each of which will be carefully audited by independent parties to significantly reduce risk.

Brickblock’s infrastructure will be realized through a website (decentralized app, or DApp) connected to the Ethereum blockchain. The platform will present you with the three investment options (REFs, ETFs, CFs). They can then select a fund based on information provided about the broker and their respective offerings — frequency of distributions, costs and fees, area of investment, current Net Asset Value (NAV), performance, track record, etc.

Once you have decided on an investment, they will deposit the amount they would like to invest into a self-executing smart contract, which will generate a signed electronic document that can be viewed on a publicly available location or ledger. The content of the self-executing smart contract is unalterable, cryptographically secured, and visible to everyone on the blockchain.

On depositing the funds, you receive Proof of Asset tokens, which are your access key to the real-world assets acquired on the Brickblock platform. They prove that you own the CF, ETF, or REF shares as outlined within the smart contract. The tokens are protected against bankruptcy and will be publicly auditable, delivering on Brickblock’s aim to offer the most transparent, simple, and secure way to invest with cryptocurrencies. To ensure the safety of the underlying assets, a digital trust fund will be initiated that will hold exactly the same fund shares as tokens were issued.

Perhaps the biggest draw of Brickblock is that its platform removes many barriers of entry to traditional investing while offering a more secure exchange. Getting started is as simple as logging in, choosing a fund most suitable to your investment strategy, and depositing funds from your cryptocurrency wallet into your broker’s smart contract. You won’t even need a bank account. Once you’ve initiated a fund order with a trusted broker, the mutually binding, self-executing smart contract regulates the rest of the transaction, including the payout of dividends and coupons to token holders. Only the token holder may reclaim fund shares — at any time.

Having transactions appear on the blockchain provides a level of transparency absent from existing investment platforms while smart contracts add another layer of accountability to the equation. All brokers will be vetted by a team of international experts, and their investments will be carefully validated and audited by independent parties to eliminate fraud. Furthermore, all activity will be initiated on Ethereum’s highly secure blockchain without the threat of bias, deceit or misrepresentation.

As with traditional investment portfolios, being able to diversify your assets within this new digital economy is essential — a function that should be extended to cryptocurrency holders who wish to diversify beyond Bitcoin and Ethereum. Brickblock is the first platform to offer the possibility of diversifying into and out of cryptocurrency in a simple, transparent, and secure way, guaranteeing a seamless interconnection new digital markets and real-world assets.