All really useful innovations must be better than their alternatives in many ways. It may not be as profitable or useful for lovers of the old order. But it does have to be useful to the end customer or investor.
Tokenized real estate can serve several purposes:
- Sale of whole real estate, transferring ownership to the new owner.
2. Purchase of real estate for its current exploitation, through rentals.
3. Purchase of future property rights.
Tokenization can be interesting in the purchase and sale of real estate because it allows:
A. Payment through cryptocurrencies.
B. Paying commissions to intermediaries.
C. Posting bids, allowing bidding.
D. Standardization of information.
E. Management through intermediaries that guarantee payment confirmation.
Payment through cryptocurrencies has several advantages and also several drawbacks. When smart contracts are used on the blockchain, cryptocurrencies are necessary to execute commands that depend on sending ETH or BNB. The irreversibility of transactions is a very desirable attribute for specific and complex operations, as in the case of the real estate world. Preventing fraud and managing to create trust is increasingly necessary, especially in some countries.
The validators of a blockchain, also known as miners are charged for providing their cryptographic proof and this charge can be extended to the traders who have been involved in the transaction or the platform on which the transactions are carried out. Intermediaries, who sometimes add great friction to transactions are eliminated.
Bidding is very useful and can help to sell more and better. At a better price, through a negotiation process. Prices can be formed more effectively for all market participants.
Comparison with other real estate investment avenues is also necessary. Overall, it increases transparency, access to investment and the ability to program how the investment is made. It is true that we do not need a blockchain to fractionalize financial rights distributing financial securities. But it is usually a good idea to recognize such rights in one place.
In conclusion, the advantages may vary depending on whether we put ourselves in the place of the client or the company. The regulator also has a lot to say and can be a major burden. The competitors of the tokenizing companies will be able to migrate a part of their operations to the blockchain. Either to improve the relationship with your customers or to save costs.
Learn more about tokenization in our DeFi Degree