Tokenization of assets – The ownership revolution

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tokenization of assets


The real estate industry is one of many industries that are all set to gain significant advantages through tokenization. Tokenized real estate investment represents a radical evolution for investing as a whole. The real estate industry has traditionally suffered from several drawbacks.

Reduced liquidity is one major drawback that acts as a deterrent for investors. This, in addition to the startup costs, acts as a barrier that keeps most new investors at bay. Additionally, real estate is not an easy investment category to get into. It either needs deep pockets or some type of investment fund.

Real-estate tokenization revolutionizes investing by virtually turning things upside down. Assets that have been tokenized are essentially blockchain-based digital tokens that are indicative of fractional ownership in a property. Developing these tokens minimizes costs, enhances market efficiency, and minimizes the barrier of entry for prospective investors.

Various blockchain platforms have entered into the real estate market, subsequently providing crypto versions of properties globally. Tokens could grant you authority over condos, resorts, beachfront properties, and much more.

However, blockchain real estate with the several options provided as conveniences to users is a relatively new development. As a matter of fact, in mid-2018, tokenized real estate securities hadn’t even come into existence.

The President of Elevated Returns, Stephane De Baets, can be credited with developing the first real estate security token offering (STO). De Baets’ journey began with the purchase of a 70 million USD hotel in 2010. In a bid to make property investment accessible to the public, De Baets and his team developed a single Real Estate Asset Investment Trust or REIT for short.

Nothing in life is perfect

STOs do have some limitations and drawbacks associated with them. As the saying goes, nothing in life is perfect. As STOs are subjected to SEC regulations, they possess a stringent rule set that is to be adhered to if you intend to launch one.

For instance, the SEC needed De Baets to instate a one-year lockup on the St. Regis REIT where investors couldn’t engage in trading of their tokens. As this rule set enhances risk, it leads to reduced investor interest.

User experiences matter and they have not reached an exceptional level so far. De Baets witnessed considerable interest via an Indiegogo campaign, a majority of it experienced hiccups when creating an account to obtain the token.

Analysts still bet on tokenization as the future

De Baets and his partners have intentions in tokenizing an extra 3 billion US$ worth of real estate properties worldwide. Analysts visualize a future where your asset tokens not only allow you fractional ownership of a property but can additionally be utilized on rent payments, for example, from the same developer.

Blockchain firms aren’t restricting themselves to tokenizing real estate property. Bigger firms such as Deloitte and PwC are looking into blockchain solutions with regards to real estate property searches, lease, due diligence, title management, and various other topics.

As far as blockchain real estate and the tokenization of properties are concerned, we’re still a young child. There will undoubtedly be a lot more applications radically diverse from the use case scenarios that people are envisioning now.

A rough analogy on the state of blockchain today would be a comparison to the dial-up era of the internet. Rapid developments are expected, and a decade from now, blockchain and crypto would be so far ahead that it would be amusing to us we considered our present challenges as ‘hurdles’.

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