Dec 11, 2019 · 2 min read

The tokenization is a type of method wherein the rights to a tradable asset is converted into a digital token, represented in the blockchain that makes the financial system more efficient, accessible and democratic. While blockchain itself provides the technology constructs to facilitate transfers of rights, ownership, and trust in the network, it is in the digitization of value elements where asset tokenization is essential.

The asset tokenization creates new business models and synergies from the network participants that did not exist before. Property owners can now digitize their assets in exchange for cryptocurrencies. With this, they could be able to bypass the expensive, exclusive and locally regulated capital-raising process that is required by venture capitalists or banks. This opens up a whole new channel for property owners who owns anything between say 3 to 20 properties, a sizeable portfolio but not big enough for fund managers to consider taking it under their care.

Some of its benefits are:

  1. Transaction is much faster due to the automated exchange that lowers transaction costs while increasing settlement speed and faster deal execution.
  2. Reduces the friction and overhead costs in the management of tokens. Since investors can purchase tokens that represent small percentages of the underlying assets, it will also open the way for a significant reduction of minimum investment amounts and periods. This also eliminates the cost of non-value adding operations.
  3. Creates more transparency. It clearly shows an immutable record of ownership, who you are dealing with, your rights and every transaction associated with the underlying property of a tokenized asset.
  4. Enables more efficient marketplaces and access to additional capital. It will help in connecting the real estate owners and developers in more sustainable marketplaces that expands the distribution to a broader and more diverse investor group.

The revolution of the real estate with asset tokenization will add more benefit to this industry. It has the potential to democratize the economy and make it more relevant, fair and secure for all market participants.

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store