Tokenization of Real Estate – Part 1

Tokenization of Real Estate


In recent years, “token” is fast becoming a buzz word. Mention tokens and people will usually think of cryptocurrencies or cryptos. Even if you’re not a trader or investor, chances are you would have heard of names like Bitcoin, Ethereum and the recent popular ones such as the Shiba Inu coin, Dodge coin.

But did you know that tokens can also be created with real-world assets?


What are Digital Assets or Tokens?

Digital assets are, in essence, electronic files of data or a digital representation of something of value that is verified and recorded on a distributed ledger or decentralised database.

They can be owned and transferred by individuals on a blockchain network. They can also be used to hold intangible content, such as videos or documents. Examples of digitized assets include cryptocurrencies, such as Bitcoin, and non-fungible tokens (NFTs), which are ownership certificates of original digital media.


How are Digital Assets Traded and Held?

From art, real estate, to commodities, any real-world asset with an inherent value can be tokenized and traded as a digital asset on a blockchain.

Blockchain’s dynamic transaction infrastructure allows the transfer and verification of digitized assets to take place securely and automatically, eliminating  such as a bank or broker, making the trading process swifter, easier, and more transparent.


Tokenizing real estate

Tokenization, in real estate, is the process of creating a digitized token that would represent ownership of a real estate asset. This is similar to the recent digital asset craze, non-fungible tokens (“NFTs”), except a real estate token would be tied to the value of a tangible physical asset.

With the rise of virtual tokens, one common question asked is what can tokenization do for real estate investment?


How does tokenization work in real estate?

As tokenization is highly flexible, the overall type of real estate that can be tokenized can vary just like traditional real estate investing. As physical assets would back the tokens, the value of the tokens would fluctuate based on the performance of the asset, similar to traditional real estate investing but with the ease of transfer facilitated by the utilization of blockchain technology.


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