The real estate sector is undergoing a period of change. We could classify this stage as Darwinian: natural selection shows that only the strongest organisms are able to survive. Companies that adapt to change, tokenize buildings, are likely to stay a notch higher.
But.. What is property tokenization?
This means that we can divide the property, sell or buy it into parts that have a certain unit of value. Business is based on transparency, trust and traceability of all data provided.
“Tokenization of property provides greater access to global real estate investment, reducing barriers to entry and increasing market liquidity” (Proptech, 2018).
Another great advantage of dividing buildings by value is that the pieces can be traded through a common database, better known as Block-chain. This technology refers to an encrypted blockchain that is not centralized and allows new ways to generate and distribute value across the network.
In addition, the tokenization of buildings has grown significantly over the Internet around the world due to the ease of sale and fundraising. Here you can check the best DigiShares real estate tokenization
In the real estate development sector and the sale of partial buildings, asset tokenization, which correlates with the cryptocurrency market, provides investors with a faster way to diversify their business.
When using such technologies and practices, rules and standards must be considered. To provide more support and reliability for the tokenization and cryptocurrency business, smart contracts or smart contracts have been developed. This type of contract operates within a technological system that is not controlled by any of the parties, it is automatic, conditions are agreed upon, which are programmed, mandatory provisions are met.
As for new technologies, the picture is currently uncertain. Colombia is evaluating the legal framework for this type of process. It should be noted that those in charge have little knowledge of this subject and potentially seek to introduce taxes to regulate the business.
“This type of project can propel the industry by offering liquidity and investment previously inaccessible to humans” (Proptech, 2018).
Finally, and raising the original idea of the White Paper, a document that describes how Bitcoin was created by Satoshi Nakamoto, outlines the idea of creating an “economy” based on trust and cooperativeism. this includes both small and large investors.
Tokenization is becoming more and more popular in the world and covers all types of investors. The future is not far off and developers are in for a big change.
Also read: How to start in the Real Estate Business?