When the blockchain industry stopped expanding upwards, it started to branch out. The cryptocurrency market itself remains depressed, subject to a year-long bear market. However, the long winter is separating the wheat from the chaff, and innovative use cases are emerging. Alongside the introduction of security tokens – a more regulation friendly variant of the traditional utility token – we are seeing tokenization of real world assets explode in popularity. One of the most natural asset classes for this form of tokenization is the real estate market.
Where real estate always contained some form of division – condos, apartments, and townhouses – these suffered from a high price of entry. The introduction of tokenization allows each individual unit to be further split. Championing the cause of real estate tokenization, RealBlocks recently went through their first round of funding. Their backers included Science, Inc and Morgan Creek Capital – heavy hitters in the digital investment space.
The Increasing Speed of Investment
In part, tokenization appeals to a new generation of investors. Millenials and beyond that are accustomed to rapid or instantaneous transactions and results. They see less appeal in traditional investments – often seen as plodding and boring when compared with these new asset classes. Where a real estate investment is often a long term decision in traditional financing, the concept of tokenization allows investors to quickly turn-over shares when it is the most advantageous. In effect, the process makes real estate a considerably more liquid market.
Dividing holdings into tokens also allows local real estate to gain investors from across the globe. While regulations are still murky about this fact, most cryptocurrency companies have learned their lesson. They are now voluntarily holding themselves to more stringent self-regulations than governments are imposing. All in anticipation of the eventual full global regulation of the industry.
RealBlocks
Real estate tokenization is occurring in several ways – including Polymath’s security token standard. However, leading the pack if the previously mentioned RealBlocks platform. Built on the Ethereum blockchain, RealBlocks is introducing all of the benefits of the cryptocurrency market into real estate. Micro-Shares, instantaneous transactions and direct peer-to-peer trading are all nearly foreign concepts to the traditional real estate market.
In the same way that companies like Ripple and Stellar are upgrading legacy software systems in the financial world, blockchain has the potential to bring the housing market into the 21st century. While it will depend on what government regulators allow, it’s possible that tokenization could make real estate an attractive investment for the average person. As it is, it remains an investment vehicle mostly for the already affluent.
Article By: Adam Stone
