The tokenization of real estate is seen as a promising future trend in the industry. This development could now get an additional boost from the corona pandemic.
Anyone who wants to invest in real estate is often confronted with a number of hurdles: Whether it is a broker, appraisal, notary or the land register entry – everything is associated with time and costs. In addition, real estate investments are comparatively expensive and therefore in many cases only possible for wealthy investors. But blockchain technology could minimize both of these problems.
How do real estate tokens work?
Tokens are digitized assets – in this case digitized holdings in real estate. Each of these digital coins then represents a small share of the property.
All relevant real estate data such as construction plans, property rights and location are stored in the form of a digital image on a blockchain and in a smart contract. The blockchain is therefore a kind of digital, distributed cash book. It is secured by the fact that everyone who makes a transaction on it has all other transactions saved in his version of the chain at the same time. So it is safe from manipulation.
Since all intermediate instances in the form of banks or stock exchanges – and when buying real estate, the notary and sometimes also lawyers – are omitted when using the blockchain, the buying and selling processes are significantly simplified and accelerated. Another advantage is that very small amounts can be invested using real estate tokens. This also enables small investors to invest in the real estate market and diversify their portfolio more strongly.
What influence does Corona have on the adaptation?
The application of blockchain technology in the real estate industry could also gain additional momentum from the spread of the corona virus. Because of the pandemic, people tend to avoid face-to-face contacts and high-touch surfaces such as cash as much as possible in order to reduce the risk of infection for themselves. Real estate tokens in which the processes run digitally could benefit from these trends.
In addition, the international governments and central banks are flooding the markets with cheap money to deal with the crisis and interest rates are historically low. Against this background, investors looking for an investment haven are becoming increasingly aware of crypto assets, as can be clearly seen from the record run of Bitcoin at the beginning of the year. The world’s most popular cryptocurrency is also based on the blockchain. This increasing acceptance of blockchain technology could also benefit real estate tokens.
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