Blockchain real estate or tokenized real estate investment has revolutionized how properties are purchased and sold globally. Blockchain enables the concept of asset tokenization in real estate, allowing users to hold tokens representing stakes in a particular property. Asset tokenization has solved many problems in traditional real estate, including limited accessibility and monopoly of large players. Investing in properties in different parts of the world has become more convenient due to asset tokenization. There are over 20 startups within the crypto space offering asset tokenization services. With real estate being a lucrative market since time immemorial, blockchain is only going to boost the value of the sector.
Real Estate Tokens To Tackle The Crypto Volatility
The crypto sector is extremely volatile, and volatility has been at its peak in recent times. Thousands of investors have got liquidated in several major crashes in the past few months. Over $1.2 billion was lost in just Bitcoin during the crash that happened in May 2022. The frequent crashes have forced investors to look for less volatile alternatives in the crypto space. Since the price appreciation of properties is a major factor affecting the price of real estate tokens, investing in such tokens could help you mitigate the risks of volatility.
Reasons To Invest In Blockchain Real Estate
1. Reduced Risk Due To Fractional Ownership:
With the asset tokenization model, you get the opportunity to own a fraction of a property for a minimum amount. This prevents you from putting all your money in one asset, minimizing the risk in case of a crash in the particular token’s price. At a time when investors are struggling to manage risks effectively, real estate tokens provide the opportunity to minimize your risks.
Diversifying your investments is one of the most important success mantras in the crypto sector. More diversification opportunities are a direct outcome of the fractional ownership model in blockchain real estate. Be it a beginner or a seasoned investor, you can save your portfolio from getting liquidated by investing in different tokens. Since fractional ownership provides you the opportunity to get ownership with a minimum amount, you have enough funds to purchase other tokens.
3. International Investments:
Traditionally, investing in real estate in a different country has always been a challenge. Regulatory laws, currency differences, and opaqueness in ownership allocation are some of the major challenges that investors face. Blockchain real estate solves all these problems by bringing properties to the blockchain. As a result, you can invest in real estate in different parts of the world, bypassing the barriers to traditional real estate investment. Platforms like Landshare allows users to invest in properties in different parts of the world through cryptocurrencies. This is game-changing for the global real estate market.
4. Improved Liquidity:
While analyzing a crypto project fundamentally, liquidity is one of the critical factors that investors assess. Asset tokenization provides better liquidity to commercial real estate. Property owners can split their assets and sell a portion of them to increase liquidity, something that is not possible in traditional real estate. The better the liquidity, the more stable a project is.
5. Seamless Proof-Of-Ownership:
In traditional real estate investment, the transfer of ownership is a time taking process involving hundreds of pages of documentation. This makes the entire process extremely complex, and the chances of human errors or fraud are always there. In asset tokenization, blockchain-powered smart contracts replace manual documentation. Smart contracts streamline the transfer of ownership, ensuring complete transparency in the process.
Blog Credits: Medium