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Here’s how tokenization revolutionizes the real estate sector
Mon 13 May 2024 ▪ 3 min read ▪ by Ariela R.
Recently, the real estate market has undergone a significant transformation due to tokenization. Based on cryptocurrency and blockchain, this technology allows real estate to be converted into digital tokens. This solution would open the doors of this market to a wider audience and would also encourage better capital flow.
Cryptocurrencies: Tokenization impacts the real estate market
Cryptocurrencies: real estate tokenization, a rapidly growing market
Valued at $613 trillion in 2022, the real estate market can reach $729 trillion by 2028. Tokenization represents a solution to the lack of liquidity in the real estate sector, as it guarantees faster and simplified transactions.
Major financial institutions, such as BlackRock and Franklin Templeton, have already started doing this issue tokenized US Treasury bills. This marks a turning point towards the acceptance of cryptocurrencies in the real estate world.
Democratization and globalization of real estate investments through tokenization
Tokenization opens the real estate market to small investors and underserved communities through fractional ownership. This cryptographic solution does real estate investment more accessible. Instead of acquiring an entire ownership, investors can purchase shares in the form of tokens.
Tokenization gives investors access markets beyond their geographic boundaries. Cryptographic tokens, in fact, are not subject to the restrictions and traditional barriers to entry of national real estate markets.
This opening of international markets offers investors greater diversification of their most attractive portfolios and investment opportunities. Cryptographic tokenization can therefore help to:
- better capital allocation on a global scale,
- more inclusive economic growth.
Improved liquidity through crypto tokenization
Investors can trade their shares on secondary markets with greater ease and efficiency. This becomes particularly relevant in the current context where the commercial real estate (CRE) market has experienced a liquidity crisis following the financial crisis increase in interest rates by the FED.
Despite its high potential, tokenization of crypto real estate remains a recent and evolving field. A clear and appropriate message regulatory framework however, it is necessary to ensure the safety of investors and the protection of their rights in the world of cryptography.
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Ariela R.
I love Ariela and I’m 31 years old. J’oeuvre dans le domaine de la rédaction web depuis maintenant 7 ans. I didn’t discover trading and cryptocurrency after a few years. But there’s a universe here I’m interested in beaucoup. And the subjects covered on the platform allow me to learn advantages. Singer at my lost hours, I also cultivate a great passion for music and reading (and animals!)
DISCLAIMER
The views, thoughts and opinions expressed in this article are solely those of the author and should not be relied upon as investment advice. Do your research before making any investment decisions.