Of the many exciting and broad new horizons being opened to exploration by the explosion of blockchain technologies onto the world stage, one of the most important and far reaching is its potential effects in the world of real estate.
As an industry that has existed pretty much since the advent of civilization, the ownership of land and property has been tied with the accumulation of generational wealth and power in nearly every society since before written record. Access to this power and wealth has been severely limited, as those of higher means would typically horde it and the price of acquiring was out of reach for anyone outside of this upper crust.
This trend has continued even into the modern world, as industrialization pushed much of the world’s populations into crowded cities with few opportunities for property ownership due to a lack of affordable development space. In the last decade, however, the emergence of blockchain technologies and online cryptocurrencies has made it possible to democratize the previously hard to penetrate real estate market even to young or foreign investors in ways previously thought unimaginable.
Specifically, platforms that offer tokenized real estate allow for cryptocurrency holders to purchase fractions of income-producing real estate. A real estate holding company can offer a platform in which small or large stakes in the listed property can be purchased for as little as a few coins (or fractions of coins, depending on the value). This stake gives you a portion of the property and any income that it generates – whether it be from the value of the property accumulating or a monthly income via rent.
For cash-strapped millennials that have been blocked from owning property, this provides an avenue for bolstering their ability to generate wealth – a few small investments in a fraction of a property can bolster monthly income, which can be used to supplement their existing spending money or be put right back into the real estate market to increase the value of their investments.
It also provides a more stable investment environment for those who have purchased cryptocurrencies as their primary means of investing – purchasing the property stakes locks down the profit they’ve made with the online currency so that it’s tied to the real estate market rather than the more volatile crypto market. A cryptocurrency investor can use a proportion of their holdings to purchase the real estate as a fail-safe for when the cryptomarket bounces up and rapidly falls back down as it has in the past.
The tokenization of real estate has also solved a number of problems that previously held back investors – the lack of liquidity and the daunting level of complexity that came with investing. Tokenizing real estate holdings using an online platform means that buying and selling for both native and foreign investors have a much simpler time searching for and buying up stakes in properties in any given country. Simply log into the platform, tie your account to a crypto wallet, select a property, and you’ll be a stakeholder within minutes of selecting a suitable piece of real estate.
You can also easily divest yourself from a property using the tokens, so once the stake has fulfilled its purpose or you need to access the currency immediately, you can withdraw the tokens and have them converted back into the original cryptocurrency almost immediately. This means you won’t need to go through a lengthy selling process to have access to the funds generated by appreciating real estate, and you won’t miss the current value rebound of the currency as it goes to the moon.
The value of owning property and land isn’t going anywhere soon. Populations continue to expand, and people will always need a place to live and room for growing food. The ability for more people to access this market means that a swath of international investors can help build and promote wealth the world over, with the proceeds benefiting not just an elite upper class of real estate moguls, but an entire generation of young, tech savvy adults ready to capitalize on the innovations let loose by advancements in technology.