After reading my previous post on crypto, a former colleague, Eric Holzhauer, sent me a picture of this ad on my site, to the right of my post about ICOs:
A few immediate reactions:
- They have a marketing budget to advertise via Google Adwords to encourage people to “Join ICO” (i.e., buy the new crypto coin they are creating in the hope of using it to facilitate rental transactions)?
- That’s legal?
- Wait, really, that’s legal?
I guess just because they’re doing it, doesn’t mean it’s legal.
But they are a legitimate company, with $4M in VC funding previously raised, and over 200k properties on their site. And yet it all feels very deceiving. They can’t say invest in ICO, because you aren’t really investing in anything that can be well defined. They do include a bold claim that blockchain principles are the future of apartment rentals. And I certainly do want to trust that guy with the white shirt and arms crossed.
Given that this was less than 24 hours after I wrote a blurb on ICOs, I thought I’d explore this one further.
My goal: Understand whether their coin has the potential to be useful
So after some quick research, here are a few things I learned:
- Their coin will be appropriately called the BERRY
- It runs on Ethereum’s platform
- They launched the token sale on December 5, 2017 and it will wrap up on February 28, 2018
- Ironically, as of today, they are prohibiting most US, South Korean, and Chinese citizens from participating — in the US you must be accredited, so this suggests the regulators are actually stepping in (i.e., so it’s not legal)
- They are offering a bonus to earlybird token purchasers: first 15 days 33% bonus, next 27 days a 27% bonus, and final 42 days a 25% bonus (i.e., everyone who buys a token gets a bonus)
- Excluding the bonus, the minimum purchase is 0.1 ETH which equals 250 BERRY, and at today’s Etherium prices would cost about $130
- They are very heavily promoting the ICO, with it being the first thing you see on their site:
So what does a BERRY actually do? If I buy 250 of them for $130, what can I do with them?
Well, their site description is not very useful: “Rentberry Token is our proprietary cryptocurrency designed to facilitate a standardized global approach to the long-term rental process, with all transactions kept in a secure manner.”
So if I want to rent a place, or if I have a place to rent, can I use the token? I couldn’t find anything on the site, so I downloaded the whitepaper. After skimming it, there’s lots I could comment on, but here were the first three things I saw:
- Using BERRY tokens, landlords can promote listings on rentberry.com or syndicate to additional rental sites for increased reach and visibility. The fee for property promotion will be dynamic and will depend on the number of other landlords promoting their properties at the same time.
So there’s a bidding process to promote your ads. Why not charge dollars, instead of BERRY tokens?
- Large volume landlords (those with more than three properties under management), such as real estate corporations, brokerage firms and property management companies, will have to pay only 150 BERRY tokens (i.e., expected to be approximately $30 USD) per month if they choose to manage more than three properties on the platform simultaneously.
So there’s a fixed monthly price in BERRY tokens to use the platform to manage multiple properties. When the white paper was written this was about $30/month, today it’s already $78/month because BERRY tokens are currently pegged to Ethereum, and Ethereum has increased in value. Why not just charge a monthly price in dollars, so you can set a price that’s well aligned with the value of the service being provided?
- The Rentberry community (tenants, landlords, friends, family or even Rentberry itself) will have the ability to utilize their BERRY tokens to cover a portion of rental security deposits for selected tenants in exchange for rewards in the form of BERRY tokens (i.e., an interest rate type return, paid in BERRY tokens, as a reward for having funded part of the security deposit). This will allow otherwise-qualified tenants who might otherwise not be able to afford a security deposit to rent an apartment, and by having others contribute to their security deposit, providing them with better reputational and financial credibility with potential landlords. This will also give landlords access to a larger pool of qualified applicants and increase their ability to rent apartments.
This one is the most interesting. It would be complex even if they were doing it in dollars, but the BERRY component makes it fairly convoluted. Here’s my best interpretation:
- They are saying renter history will be tracked on the blockchain
- For renters who have historically paid back their security deposits (i.e., they are implied to have good credit), they can borrow money from a third party to pay the security deposit for them, in exchange for interest payments (as with any loan)
- This will allow potential renters who can’t afford a security deposit (but could in the past?) to be able to afford a rental
- And it will also increase demand for properties, by increasing the pool of potential renters to those who both can and cannot afford a security deposit
- And all of this will be a wild ride, because the security deposits will be borrowed in dollars, but the interest payments will occur in BERRY tokens, which will presumably have a volatile value
My conclusion after 20 minutes is no, this sounds confusing and not useful.
They also include lots of language about how blockchain technology could facilitate secure and decentralized rental contracts. Maybe that’s true, but it sure feels like they are taking advantage of the crypto hype to encourage uninformed people to part with their money and fund Rentberry’s business in return for a token that may not do anything useful and could lose all of its value.