Democratizing wealth has been the rallying cry of blockchain and cryptocurrency advocates. With the completion of the world’s first blockchain real estate transaction, more steps are being taken in that direction. In this episode, join Chris Larsen as he interviews the co-founder and CEO of BPN Capital Group, Edward Rodriguez. Edward shares his thoughts on blockchain and discusses plans to tokenize assets. He also shares his insights on using blockchain in different industries and how it will push the democratization of wealth forward.

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Completing The World’s First Blockchain Real Estate Transaction With Edward Rodriguez

Edward J. Rodriguez is the CEO of BPN Capital Group. A Miami, Florida-based multiservice DeFi firm powered by blockchain technology. Edward is a serial entrepreneur with decades of professional experience. He’s founded multiple companies, including Blassbooks, a social media marketplace for college students to buy and sell college textbooks for free and DR Triple M Properties, a commercial financing firm. He also has experience as an independent consultant performing quantitative risk analysis for elite investors as well as funds. Along with BPN Capital Group, Edward is focused on integrating the commercial finance industry with blockchain technologies, specifically through tokenization of valuable hard assets.

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Edward, welcome to the show.

Thank you for having me.

I’m excited. Your story really appealed to me, which I’d love for you to share with the audience, but also just what you’re doing in the blockchain space. A lot of our audience members that are reading, they’re very accustomed to real estate, they’re accustomed to commercial real estate and doing these deals. One of the missions of Next-Level Income is to provide our investors these opportunities. I can’t wait for you to share how you are sharing things that were reserved for billionaires and hedge funds with the average everyday investor. Before we jump into this, Edward, would you mind sharing a little bit more about your background, how you ended up here in Miami, in the United States and what you’re up to?

My name is Edward Rodriguez. I’m the CEO and Founder of BPN Capital Group. I’m originally from the Dominican Republic and I moved to Miami in 2005. It was coming to my second home pretty much. I started in management in real estate very early on. My brother, when I arrived, had already been in the industry for ten years. I was blessed, literally. He took me under his wing and pretty much taught me all the tricks and made me fall in love with it. Through that, I became a commercial real estate agent.

Right before I became a commercial real estate agent, I was introduced to some private clients to do quantitative risk analysis for them. I had a great mentor that was retiring and pretty much was looking for someone that was not a yes sir person. When I was introduced to him, he saw this guy that pretty much is like, if I don’t agree with something, I’m going to tell you. Right off the bat, he asked me a couple of questions. Obviously, I was not in agreement with it and after that, he was like, “You’re the guy.” He had met with Harvard graduates and with guys that were trying to get accepted what he was offering and none of them was able to pass the test. Here’s this guy, at the time I was 17, about to turn 18. He goes, “You’re my guy. I’m going to teach you stuff that you’re not going to learn anywhere else.”

He had been in the quant industry for close to 40 years. He put me in touch with some of his clients as well and it went on from there. I did quantitative risk analysis for about 4.5 years. Yes, the money was great. I’m not going to say it wasn’t. The money was fantastic, but I got to a point that I wanted to do more. I got to a point that I also wanted to try to level the playing field by bringing my talents to commercial real estate and all the things that I had to learn pretty much within quantitative risk analysis to my other industries. It was a great rock. In 2010, I decided to become a commercial real estate agent and I did that for nine years until 2019. I still hold a license, but I use it mainly for personal investments and friends and family.

In 2013, I discovered blockchain. It’s like everything I had been doing in my previous professional life was literally to get in line with what I learned with blockchain. It was the final piece of the puzzle, I could say. I started mining first. I wanted to understand the technology because there were all things on the internet that I was like, “I want to understand that firsthand.” I don’t want to go by what Joe here is telling me because Joe is telling me A but Nathan is telling me that A is not accurate. I started building Ethereum rigs. That was my first project. I started building mining rigs myself. I went through a lot of trial and error. I did a couple of programming courses on YouTube and I hired a couple of computer engineers to teach me a thing or two about building a computer. In 2014 I started my mining farm. It was a great ride.

Was this down in Florida?

Yeah. My hardest challenge in mining was the heat here. The weather does not help.

You got to keep the rigs cool.

Pretty much every single person I brought in to help me with the problem was like, “That isn’t possible. This is not going to work.” It’s 85 to 90 degrees every day here and your machines produce an excess that will make this room be at 120. When I started, I had about sixteen ACs running 24/7 at a warehouse to a point where I was frustrated. I was tired of hearing, “No.” I said, “I got to reset and I got to start from zero.” I started thinking, “Cars produce an immense amount of heat. How do cars actually retain all the heat and don’t overheat?” I went through the basics of other industries that had to deal with the same problem. I also looked in a YouTube video of how guys who farm marijuana in-house deal with the heat because that produces a lot of heat as well from the lights.

I don’t have any experience in that, nor blockchain mining, nor Bitcoin mining, but it makes sense.

I had no experience in it, but I started researching because everything the pros were telling me was against my odds. After a three-month period of researching and playing around with what I was doing, I found my solution. I built a system to help me get the heat outside, similar to how people that farm marijuana inside, do it. I saw that. I created a huge fish tank and I put in some of the miners inside with computer oil. I bought this huge system that worked like a refrigerant that we have. Pretty much, I had this huge thing on top of the tank and hot air came in through one side and cold air came in through the other. I had oil going in through this tube and then cool oil now through this one. I was able to reduce from 16 ACs to about 2. It was amazing. It was a great ride. I can’t complain.

You didn’t even talk about your hotdog stands when you were eleven years old. What I love about you, Edward, is you’ve been a serial entrepreneur your entire life. Quantitative analysis, seeing how the markets work, going through the commercial real estate, and what a decade to be in the commercial real estate. Those ten years, phenomenal. Starting with almost like with the shovel, literally mining for Bitcoin. Let’s back up a little bit. This is a little bit new to me and I’ve read a statistic, only 6% of Americans own cryptocurrencies. We’re still very early on in this. If you could share a little bit about what is Bitcoin, tokenization, and the blockchain before we dive into what your business really does.

I’m going to make a separation. You got to see blockchain as the internet. If you go back to the ’90s and you will be able to separate Yahoo, for example, Yahoo and the internet were not the same things. Yahoo was a company that used the internet to function. It’s exactly the same thing with blockchain. Blockchain is the internet. It’s the system that allows cryptos to function. Blockchain can be used for everything. You got to see blockchain as this accounting system that is incorruptible. The information, after it gets published, cannot be tampered with. The big problem blockchain resolves is transparency. I can’t tell you something now and go back two days later and change it. It won’t let me. Also, for me to legally make a change, let’s say I’m doing on a smart contract, it leaves a trace of when I made the change, what time I did it, and I can even add which IP address I did it from. That’s what blockchain gives us.

I was giving an analogy to someone that didn’t understand it and didn’t understand the benefits. It didn’t matter what I said. He didn’t understand the benefits. I said to him, “Let’s make it simple. Our government just issued a couple of trillion-dollars stimulus for COVID. Let’s say all Americans would go ahead and say, ‘We demand the government to show us what they did with our tax money. We want to understand.’” The government, unfortunately, will take at least 3 to 5 years to come back with an answer. God knows if the answer is going to be accurate. If the government had a blockchain system implemented to do all this, it would take less than three days to give us something. Not only that, they could tell us, “It’s in a public ledger. Go revise it. Go review it.” That’s the beauty of it. They cannot tamper with the information after it’s done.

Wouldn’t that be awesome? I can’t wait until that day comes.

The benefits of blockchains to humankind and I have said it before, is the best and most advanced technology that humankind has ever encountered. It’s one of the industries that in 10, 20 years, the same thing that happened to the internet back in the early days. Nowadays, the internet is part of our lives. We use it for our GPS, to order food and to order a taxi.

Now we got 5G and you can be anywhere and have high-speed access. It’s amazing.

It’s the same type of thing. I will say that people cannot take their eyes off blockchain because it’s going to be in almost every single technology that we are going to be using. It’s going to be a part of it. A lot of people don’t understand how cellphone technology works. Do they really need to? No, they don’t. They just know it works.

Also, like electricity, I love that analogy. I understand how that works. Do you understand how electricity works? This is coming from an engineer. They got taught how electricity works. I still couldn’t explain it to a layperson very well. You don’t have to. You just know when you plug it in, it works. What other areas do you see as big opportunities with blockchain with respect to sectors that are going to rapidly transform and benefit from this technology?

Crypto was the first use of blockchain because a lot of people don’t understand blockchain is not a new concept. This was introduced in 1991. Unfortunately, it was not accepted and no one saw the kind of benefits that this could actually give to humanity back then until this group called Satoshi Nakamoto saw what happened in 2007 and said, “Enough is enough.” He came up with a white paper for a peer-to-peer currency which is Bitcoin. It’s the first use that pretty much blockchain has had. From there came Ethereum, then Litecoin, and the rest is history. All the others came from that.

Do you know the name of the guy that developed Ripple?

I have spoken to their group in the past, but now I forgot his name.

His name is Chris Larsen. I wish I figured that one out. He founded Eloan and then Ripple. He’s definitely a little bit higher net worth individual than this Chris Larsen, I can tell you that.

A lot of people don’t understand that the Ripple network system is being used by a lot of banks. He makes the wiring system that’s been obsolete for how many years seem like a thing of the past. You can transact within seconds. What Ripple did for the wiring industry is revolutionary. It will keep advancing with time. Ripple was the first use of the technology. That technology can be used for so many other things. I just gave you an example for the government, and it could be used in the medical industry. It can be used in the automobile industry, the energy industry, and the biofuel industry. You got to think of it as this huge accounting system that’s incorruptible. That’s how you have to look at it. I see it being part of our everyday lives.

Just the things that it can do for freedom and the ability to move around the world. We had a guest on the show talking about these digital nomads who travel the world and they don’t really have a home country. It’s interesting if you put those two concepts together. Edward, let’s talk about BPN Capital, this momentous transaction that you guys are on the verge of doing here and how you are, I would call it, democratizing these investments for your average, everyday investor.

Let’s go back to my quant days. In my quant days, I saw that there were a lot of investments that were reserved for groups and funds or investors that have billions under management. I always ask myself, “How can I give this access to your traditional guy, to the guy that only has $100,000 to invest, or maybe $5,000 a year?” Not all of us have the same capital. I must admit, it was frustrating because when you see someone making 100% of return the day that we close, and then you see someone in a real estate transaction making 5% cap a year on their money. It’s like, “For Christ’s sake, it’s a huge gap.”

The reality is, it’s a huge advantage that people that have a lot of access to capital have. “How can I level the playing field?” That’s why I said that when I discovered blockchain in the beginning, it felt like the missing piece of the puzzle. I have to go to this venture. In 2018, I remember telling my wife, “It’s time. I’m going to get out of everything else I’m doing and I’m going to concentrate 100% on this project.” She goes, “What project?” I go, “I’m going to concentrate on the hard asset tokenization project.” When I said that, she’s like, “Oh, God,” because she knows how I get when I get invested into a project, she saw it many times.

Pretty much, she’s like, “This guy is going to go crazy on this new idea and he’s going to put a ton of money into it.” I had a huge team of lawyers already ready to go and start this. In the beginning, she didn’t get it. She couldn’t understand a lot of what I was doing when I started back in 2013, 2014. After 2015, 2016, she started understanding what I was doing and she started seeing how revolutionary that technology was. She finally came around and came on board and became the CFO of the firm.

What is her background, Edward?

She’s an accountant. She’s a certified fraud examiner. It goes hand in hand with a lot of what we do. At BPN, we are capable to go back to the point that you were making to say, “Commercial mortgage-backed securities.” A lot of those loans get packaged into bonds and sold in the secondary market to only high net worth investors that have the capital to say, “We have a couple billion under management, we can afford to buy a trade of $100 million, $500 million, or $700 million,” and because of that, they get access to one of the safest investments out there. It’s kept trap.

Aside from that, they also get access to deals where they’re capable of saying, “We’re going to put in 20% of what it costs to develop this project, but we want 50% of the equity on day one.” If you digest and understand what I just said, they’re putting 20% down of what it costs, and they want in return, 40% to 50%. The day they close, they made either 100% or 150% on their money. The reality is, that structure’s there, and it’s always been around. If you need $100 million to complete a project, and that’s 20% of what it will cost, only a billionaire can pony up $100 million. No one else in their right mind is going to go up and say, “I’m going to write up a check for $100 million and my net worth is $150 million.”

Even then, the centimillionaires in this country, there’s a lot of them, but it’s still a very select pool. How does your company take that structure and bring it down to, for instance, people that are reading the show? Lots of accredited investors. They say, “I can invest $100,000, but not $100 million.”

Let’s go to the commercial mortgage-backed security because we’re doing one. It’s called a commercial token security. It’s in a work first-class asset that sits on downtown Miami in a cold area for fantastic tenants. We can get this loan done with UBS or any other CMBS lender out there and we chose to do it this way because we want to give access to the investors that aren’t so lucky to have a lot of money on their management. What we do is tokenize it using blockchain and give investors the opportunity of buying tokens that represent a portion of the value of the whole mortgage instead of selling it to a single lender.

When we came out with this structure, we had lenders approach us and said, “Will you sell the whole thing to us?” I’m like, “Did you listen to what I said? No. That’s not what I’m intending here. My intention is to give access again to accredited investors, small family offices, and small funds. Yes, you can participate. We don’t have a problem with you guys participating because I don’t believe in leaving you out of it. I believe we should all participate, but also give access to the small guys that don’t have so much money under management.”

The beauty of that now you can say, “Even though I only invested $100,000, I’m going to be able to profit the same way someone that’s worth $2 billion, $3 billion is able to capitalize on these opportunities.” On the other note, the other structure that I was telling you that they come in regularly with 20%. We already have a structure like that. You see, we have a building in downtown Miami by a well-renowned developer that has built a couple of the most iconic buildings in South Florida. We’re doing a structure with them.

Not the ones they had to tear down, right?

Not at all. These are groups that have been in luxury buildings that have 60 to 100 stories.

You got some beautiful properties down there in Miami, just gorgeous and amazing.

They’re going to be able to do the same thing the billionaires are able to do. The only difference is, they have a lower come-in price and there’s no limit on how much they can invest. They want to invest $1,000. They’re going to be able to invest $1,000. Pretty much on day one, when we close that, they’re going to own 40% of the equity of that structure. We’re raising 20% of what it costs to build this project, and the cap back 40% of the equity. They will make 100% of the money on the day we close.

Aside from that, when the project is finished, which takes about 3 to 4 years to complete the construction, the building appreciates another 60% to 70%. Not only now have they appreciated 100% on day one, now you have an extra 60% to 70% after the project is completed. A total profit of 170%. That’s what we’re looking for. That’s the type of access we’re looking to put in their hands and to be able to participate within the structure. Before, we were reserved for a very select group that had a lot of money under management.

Just to be clear, Edward, you have built the infrastructure to make this happen going forward. This isn’t a one-off thing.

That’s accurate.

I want to stay in touch as you continue to build this out and do more deals. What are your predictions for the next five years? What do you think this is going to look like after these first deals get done?

I have had a couple of banks’ top executives, even one of the founders of a bank reach out to talk about what we’re doing and I was very clear to them. I told them, “This is a thing of you jump on the bandwagon now, but you come in late and unfortunately, by then, you’re going to have to pay a premium. You decide which way of history you want to be. Do you want to be a disruptor or do you just want to be a follower? If you wait 3 to 5 years, you’re going to be a follower. If you jump in now, you’ll be a disruptor.”

In the next 3 to 5 years, it’s going to be very exciting because we’re not looking back. After these things get done and we’re following every single regulation there to make sure that is done properly and we’re not calling our tokens anything but security tokens because that’s what they are. It’s going to be a new age because we’re democratizing and we’re saying, “Instead of having all the wealth reserved for the already wealthy, why not give access to the accredited investors and small family office to join in and participate in the same type of structures that are currently reserved for the billionaires?” That’s one of the biggest things that I take from what we have done.

There are a lot of other fantastic firms out there that have put in their grain of sand into what we’re doing. In the next few years, our dream is to have this group of companies. We know that there are a lot of other companies that are going to this. We’re looking to be similar to match that, where we’re going to have trillions of dollars that will go through this brand new industry that is coming into play now, that levels the playing field and says, “Not anymore. What was done yesterday is not what the future holds.” There are a lot of problems that we resolve also. It’s not only the technological advances. If you look up the security market and the secondary commercial mortgage-backed securities market, it has a huge liquidity problem.

That’s what excites me the most about this. It’s phenomenal. Even in our deals, you invest $100,000 and it’s locked up for 3 to 7 years. If you’re able to trade that in real-time, it’s phenomenal. I’m excited to see where this goes, Edward. We’re going to stay in touch and we’re going to follow your story and probably have you back on here on the show to get some updates. If the audience wants to stay in touch with you to follow along, what’s the best way for people to find out about BPN Capital and find out more?

They could go to our website, www.BPNCapitalGroup.io. They could also visit us on Twitter, @BeProNetwork. On LinkedIn at BPN Capital. We’re here to help. We have shown that through the history of our firm. We have had a lot of other groups that are trying to do similar things to what we’re doing. We have welcomed them with open arms and say, “Yes, we’re here to help and we’re willing to collaborate.” I have had banks reach out and top executives. We’re not saying banks are going to go away.

I’ll give you an example. That structure I gave you that we’re doing a 20% capital raise, we’re doing a hybrid with one of the banks in the US because they definitely understand what we’re doing. We said to them, “You’re welcome to participate.” When they got what we were doing, this is a deal that they will be willing to pledge 65% of the money to build this project. We said, “We don’t need 65%. With 50%, we can still give you first lien position on this project.”

They like that because their LTV is lower.

Lower LTV means their money’s worth more. They get the first lien position and they’re coming in at $0.15 on the dollar instead of $0.65 on the dollar on a $665 million project. For them, it’s like, “Thank you. Keep it coming.” We’re happy to get that type of financial institution to come into play because at the end of the day, we told them, “We can help you do more with the capital you already have.” That’s what we’re doing means. You could do more with the same capital you already have, thanks to this structure that would allow the guys that were not typically able to do this to do it. Now you have a huge advantage where you’re saying, “I come in $0.15 less on the dollar in these premium projects.”

If you’re an investor and you get to do five deals instead of one, you get to diversify and participate in more opportunities. It seems to be a win-win for all the parties involved. Edward, I love your story. You started with hotdog stands at age eleven all the way up to now, pioneering Bitcoin mining as well as this new use of blockchain technology. If you could go back to your 25-year-old self and give yourself a piece of advice, what would it be?

BPN Capital Group is currently focused on merging the conventional commercial finance industry and the world of blockchain technologies. Through the tokenization of hard assets, the company demonstrates the real world use cases of blockchain and non-fungible tokens (NFTs). Through these technologies, it is BPN Capital Group’s mission to help usher in a new era of transparency and decentralization in commercial financial markets, unlocking new growth opportunities in the process.

Prior to launching BPN Capital Group with his co-founders, Edward served as an independent consultant performing quantitative risk analysis on the portfolios of elite investors from 2007 until 2012. During this time, in 2010, Edward launched Blassbooks, an online marketplace for college students to buy and sell books for free.

At the same time that he was organizing Blassbooks, Edward began his career in commercial real estate. During his nine-year tenure in the industry, he closed hundreds of millions in commercial real estate deals before pivoting to focus fully on BPN Capital Group.

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Tagged: Blockchain, Real Estate, Commercial Real Estate, Risk Analysis, Bitcoin Mining, Democratizing Wealth, Group 3