How Blockchain can make real estate more accessible
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Most people think of blockchain as a tool for buying and selling cryptocurrencies.
But blockchain technologies can transform investments in real estate, art and commodities through the tokenization of what are known as real-world assets (RWA).
Real estate is universally understood, essential and at the core of the American dream. But investing in real estate has a high barrier to entry because of how expensive it is. It also lacks liquidity because it can take a long time to sell.
Bringing real estate on a chain can make the asset class more accessible to ordinary investors who do not have the financing to buy entire properties.
“Traditional real estate often struggles with poor transparency, illiquidity and multiple intermediaries,” according to Citigroup’s March report Money, Tokens and Games: Blockchain’s Next Billion Users and Trillions in Value. “Blockchain can be a good fit as a single shared source of truth in a multi-player market, all working with overlapping data and the need for constant reconciliation. Tokenization can also help reduce minimum investment amounts and open up asset discovery.”
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Real-world assets are assets that exist in the physical world, such as real estate, goods, and art, but are placed on the blockchain and used as a source of return in decentralized finance (DeFi).
“You can tokenize a loan, a house, a building or a car loan,” said Trevor Bacon, co-founder and CEO of real estate investment platform Parcl. “You can put it on the blockchain and it’s a much more efficient way of doing things.”
Parcl bridges traditional real estate investment with cutting-edge blockchain technology to provide data-driven solutions for modern investors.
“We allow people to speculate, hedge, bet and trade real estate prices much like they would any other type of stock or derivative,” Bacon said. “Real-world assets are a new theme – it’s a term for what people are doing, using the blockchain for real utility instead of NFTs or games.”
The two main ways blockchain benefits the $327 trillion real estate market are that it replaces intermediaries with code, making it more efficient than standard record-keeping; and it settles transactions instantly on a public record that can be verified by all parties.
“From an operational perspective, it’s more efficient,” Bacon said. “It’s all done through software. You can issue a mortgage directly instead of going through a bank. It’s managed through smart contracts and can be enforced by software, not humans.”
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This article How Blockchain Can Make Real Estate More Accessible originally appeared on Benzinga.com
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