Demystifying Real Estate Tokenization: A No-frills Guide
Tokenization takes the entry barriers entirely out of the equation. The real estate industry has long struggled with high entry barriers and illiquidity.
Real estate has emerged as one of the glorified use cases of blockchain technology. Yield Crowd, a tokenized real estate portal, tokenized a $50M portfolio of real estate as YIELD tokens on the stellar blockchain. If you’re an entrepreneur reading this, pursuing real estate tokenization really matters for you. How though, if you wonder? Let’s get started.
How come Tokenization in Real Estate?
Tokenization refers to converting a physical asset into a series of digital tokens and then selling them on an online exchange. The people who buy these tokens are buying a piece of the asset. This asset is a digital token based on the blockchain. Each token represents direct ownership of a particular asset. A piece of real estate, shares in a company that owns real estate, participation in a real estate investment fund, or anything else can be used as these assets.
What Purpose Does it Serve?
Tokenization addresses real estate's most serious problem: asset liquidity. It cuts out the middleman and allows for direct ownership transfers from one investor to the next. In the traditional method, several parties are involved in the legal transfer of assets, whereas tokenization simplifies buying and selling real estate.
The distributed ledger on which tokens are stored helps to mitigate the issue of undeniable proof of ownership, but it also helps to improve real estate market transparency. By digitizing your asset, you will achieve complete security and high clarity.
Tokenization takes the entry barriers entirely out of the equation. The real estate industry has long struggled with high entry barriers and illiquidity. Tokenization helps to democratize this market by opening it up. It also allows large amounts of money to flow in.