As we all can see the importance of digital assets nowadays but a lot of people still prefer to own a physical asset. The way we used to spend our money has changed. Ownership of an asset has its own appeal and is not limited to any age group.
In fact, Real estate investment is a good source to create wealth but there is a big barrier to enter into this market, which is the cost of entry.
This biggest barrier is crushed by blockchain based real estate providing fractional ownership with very small investments. The tokenization of a real estate asset solves the accessibility and affordability issues in the real estate market.
Lets say a new investor does not have enough money to buy the whole property, he can now buy a percentage ownership of that real estate property with the minimal investment. The investment share of the investor will then appreciate and depreciate with the overall value of the property.
Tokenization or fractionalization of an asset works with the help of smart contracts. The contracts are saved over the blockchain and are completely transparent. The tokens associated with your investment are transferred to the investor’s wallet. The token gives the legal ownership rights to the investor over his percentage(fraction) in the asset.
Real estate investment platforms backed by blockchain improve liquidity of assets and are cost effective. Tokenization of real estate assets cuts out the intermediaries, such: dealers and brokers. Blockchain based platforms allow direct payments using crypto. The transparency of blockchain based purchases makes it less riskier than purchasing the old fashioned way.
Blockchain backed platforms are new to the market but they have great potential in the near future. Blockchain democratizes real estate investing by allowing everyone to enter the market. There is no need for investors to get licensed. Blockchain based investments are transparent for everybody and require no paperwork. Investing in real estate based on blockchain is way faster as compared to the old fashioned way.
Obviously there is a long way to go until blockchain based real estate platforms transform the whole market. Banking regulations will soon change to include cryptocurrency transactions.