Tokenization of Real Estate
What problems can tokenization help solve?
Ease of transactions
For usual transactions, there are many different parties involved, especially with the legal transfer of the asset. Tokenization could help as transactions are carried out via a blockchain network, tokenization could simplify real estate transactions, making it faster and easier to buy or sell.
Skip the intermediaries
With blockchain technology, transactions are secured via a network of nodes and records are immutable. Thus, tokenization could cut out the middleman and allow ownership to be transferred directly from investor to investor.
Liquidity of real estate
In the case of real estate, it would usually be an asset of high-value, which makes the buying and selling of it difficult (hard-to-trade) in the market. Tokenization enables the value of the asset to be divided into parts (fractionalization). The resulting ‘fractions’ could then be a more viable and accessible value for more investors to buy or invest into.
The promise in the future
By fractionalizing a real estate, and allowing more small-scale investor participation, liquidity is enhanced.
This value proposition is important in real estate as this market is higher in value than any other asset class in the world, rendering it highly illiquid.
Asset-backed tokens are a vital development of blockchain technologies as it now empowers investors to move from highly speculative cryptocurrencies without collateral to asset-backed tokens.
Real estate tokenization via blockchain technology will increase the investor base and help the real estate market continue to thrive.