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Disruption: Real Estate Tokenization

Disruption, disruption, disruption. If we were in school, being a disruptive student would surely result in being sent home for a few days. However, the disruptor in a capitalistic society is rewarded for their disruption, if successful. Those who can’t adapt will be left finding themselves out of business. For example, the following companies disrupted their respective industries:

Netflix disrupted content streaming and creation.

Uber disrupted food delivery.

LinkedIn disrupted recruiting.

Amazon disrupted book stores.

Google disrupted mobile phones.

Tesla disrupted energy storage.

Facebook disrupted SMS messaging.

He who finds the next industry that is on the verge of disruption can find himself wealthy. Cryptocurrencies are already disrupting the financial sector. With new decentralized finance (DeFi) products taking the world by storm, it’s only a matter of time before we see the real estate market become fully disrupted.

As it stands, that is well under way.

Tokenization is the next big wave in the blockchain space. Most assume tokens and cryptocurrencies are the same, however there is a difference between the two. Cryptocurrencies have their own blockchain network, while tokens are built on top of blockchains as applications. Think of Ethereum as being a cryptocurrency and ERC-20 tokens as being apps built on top of its network, such as USD Coin, Matic, Telcoin, etc. Tokens can be pegged to value in the real or digital world.

Global real estate is worth an estimated $680 trillion. Assets that once remained as hard [tangible] assets can now be digitized through blockchain integration. Tokens can be issued to represent real world assets such as real estate, art, and even professional athlete contracts. When you think of stocks, you’re essentially trading a piece of paper (now digitally) that represents the value of a company. When one thinks about that, it's not too far-fetched to provide other assets with the same ability to be tokenized as if it had its own share structure.

What opportunities does this provide for investors?

1. Creating tokens and pegging them to real estate will allow for capital to be raised in a much more efficient manner.

2. You’re able to invest in real estate all over the world. This eliminates being limited to a specific geographical location.

3. Lawyers serving as middlemen can be replaced and everything flows through the blockchain.

4. You don’t need bigger capital. You can invest at a reasonable rate.

5. You have the ability to sell or buy at any time without the need of extensive paperwork and notary services. All can be done through the blockchain.

6. Large real estate developers can list their tokens without going through the complex onboarding process of trading REITS on the stock market.

7. Tokenization provides a benefit over crowdfunding because it gives you immediate digital ownership, allowing you to sell at any time.

Real Estate will become even more valuable through tokenization. Below are a few platforms who offer tokenized services in the real estate market (Disclaimer: I have no investments in any of the following platforms, nor do I endorse them): RealBlocks is a technology platform that connects advisors and investors to the best alternative investment managers. Today, many real estate and alternative investment managers are limited to raising capital locally. However with RealBlocks, these managers can now raise capital globally through [their] platform's connectivity with institutional and intermediary channels. For the first time, investors around the globe can buy into the US real estate market through fully-compliant, fractional, tokenized ownership. Powered by blockchain. When you tokenize your security with SolidBlock, your investors benefit from enhanced liquidity and fast, secure, low-cost transactions, so they can rest easy knowing their investments are accessible and tradable with the push of a button. Vave is a platform where individuals can invest from $ 10 in real estate through private clubs deals owned by project managers. Customers could achieve an estimated yield of +9% per year. *APY is based on an indicative estimation DigiShares offer high-quality functionality for tokenization to enable investors to register and be verified, purchase tokens, and for the longer term management of the group of tokenized investors, the platform will maintain the share cap table, facilitate communication with investors, votes, shareholder meetings, etc. Investors worldwide can buy into the US real estate market through a fully compliant blockchain-based Real Estate Tokenization Asset Platform (RETAP).


Author: Eric White

Editor: Shamya White

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