The real estate market is very complex. The reason for this is that it always involves several interested parties, large sums of money, specialists in various fields, contracts, laws, etc. That’s why a large number of companies, startups, individuals, and even government institutions turn to new solutions, one of which is the blockchain tokenization.

What is tokenized property?

Tokenization of real estate allows property owners to distribute tokens through the blockchain platform. Tokens represent a certain number of shares for a certain real estate asset.

Other investors can purchase these tokens, and by doing this, they become partial owners of this asset, which additionally allows them to participate in cash flows and increase the value of assets.

At the same time, they have the freedom to sell any number of their shares whenever they want, and they can even do this through various online markets. Even though the whole concept seems quite understandable and straightforward, it raises many interesting questions regarding the future real estate market, as well as blockchain technology.

Many people talk about the many different benefits that tokenization can offer. Let’s stick to what we know and talk about three common benefits that are obvious:

1. Invariance

We already know that blockchain chains cannot be changed, and this function is really well transferred to tokenization. Having a digital transaction history helps every interested person and investor to prove their property. At the same time, such a structure also helps reduce the likelihood of fraud.

If the owner of the token tries to sell a certain token several times, this structure will show the exact history of ownership and deprive anyone of the opportunity to fake transactions and deceive investors.

2. Automation

The ability of smart contracts to contain various business logic relates to programmability and helps to set automatic events when certain conditions are met.

Relying on third-party exchanges, you can track secondary transactions without any complications. Investors can also effectively use any other processes, such as voting. This programmability can be very useful for speeding up calculations, as tokens can contain built-in compatibility.

3. Liquidity

Tokenization per se extends the possibilities for partial ownership. A decree, such as the US dollar, can only go up to $ 0.01, but tokens can have up to 18 decimal places, which means that they can go much lower if some barriers are not introduced.

This means that the investor’s contribution is much lower and that there is more room for partial ownership. For example, instead of investing 100,000 USD in a particular property, investors will be able to pay 5,000 USD for their fractional ownership of tokens.