It’s no secret that 2022 marked the beginning of a major bear market after crypto had been running high since before the pandemic. With major scandals rocking the crypto world every other month, many investors are still unsure of what the future holds, which is reflected in prices bouncing dramatically daily.
Experienced crypto investors know that bear markets are just as much a part of the game as bull runs, which is why many look for a safe harbor during downturns to help hedge their investments. While it used to be transferring coins into USDT or other cryptocurrencies pegged to the dollar was the only surefire way to hedge against rug pulls and bear markets, the DeFi world has managed to create some attractive alternatives.
One of the most promising of these alternatives is tokenization, which splits the value of a physical asset, like gold, paintings, or antiques, into a set number of tokens. Each token is pegged to a percentage of the value of the good, meaning its value only changes with the good itself, rather than shifting with the highly volatile crypto market.
These tokens have a few advantages over owning the physical good itself – namely, liquidity, maneuverability, and logistics. Tokens can be bought and sold in a matter of hours, so traders noticing an upcoming bull run or bear market can quickly sell or buy tokens to take advantage of the coming market shift. Traders can also buy into assets that they would otherwise be unable to afford if they were buying outright, and they have the added benefit of not needing to pay for insurance, storage, or upkeep.
While gold and paintings have their usages, the asset with the best chance of creating real-world change is real estate tokenization. RealT, a DeFi company that has been working to create a tokenized real estate exchange, is hoping to create a more democratized form of property ownership.
Owning property has traditionally been one of the primary methods of growing wealth for up-and-coming generations. With today’s insane real estate market and an ever-tightening supply of new homes, many Gen Zers and millennials have essentially given up on the prospect of ever owning their own home.
This is where RealT comes in. By tokenizing real estate, investors can invest in small or large percentages of a rental property, with the rents being paid out based on the percentage of ownership. As an investor buys more and more tokens, their share of the rent goes up, and they can accrue more and more monthly income and begin growing their wealth in earnest.
The key to success for RealT is accessibility – most people are too busy or uninterested in learning the ins and outs of technology, which is why they’ve made it as easy as possible to start buying and selling their real estate tokens. Users can simply create an account on RealT’s platform and begin buying and selling tokens using a credit card or debit card, without the need to deal with buying a crypto wallet or going through an exchange.
While cryptocurrencies are an incredible technology, we are still in the early stages of seeing what it can do and how we can create some level of stability. Until then, crypto investors need their port to shelter in during the frequent storms – and there’s none better than fractionalized real estate.