Faster, Cheaper, and More Secure Real Estate Ownership with NFTs

The 21st Century has certainly been a time of incredible technological advancement. In just a few years, we’ve seen the rise of the internet, social media, and mobile devices. These technologies have transformed the way we live, work, and play.

In April 2022, for instance, there were more than five billion internet users globally, with a penetration rate of over 62%. And the way things are, particularly with the aftereffects of COVID-19 and 5G arriving on the scene, this number will only continue to climb. IoT’s evolution is another factor driving innovation and internet adoption globally.

Despite such groundbreaking changes across industries, however, one crucial domain has often lagged behind in undergoing tech-driven, user-oriented transformations. The domain in question is asset ownership. 

Of course, one can now access stocks and other investments digitally. But the process of buying, selling, and transferring ownership of physical assets like real estate are still relatively slow and cumbersome. 

There’s a Growing Need (and Demand) for Asset Tokenization

The solution to enhancing ownership lies in asset tokenization. Put simply, tokenization is the process of representing physical assets like real estate digitally on the blockchain as tokens.

Besides providing proof of ownership, these tokens also serve as tradable assets—meaning individuals can use them to buy, sell, or rent their property. 

Currently, the landscape for real estate trading is poorly optimized to ongoing technological and financial progress. For one, the industry involves multiple intermediaries—agents, brokers, lawyers, etc.—which causes bottlenecks, increasing time, costs, and inefficiencies.

Moreover, in a rapidly digitizing world where adults spend over two hours on social media daily, the real estate industry is still predominantly analog, thus running the risk of missing out on the myriad opportunities that are presented by innovations in blockchain technology, among others. 

Tokenization is thus the need of the hour—and thankfully, the real estate industry is taking a steady turn in this direction. The metaverse’s recent rise to fame has catalyzed this change quite significantly. Leveraging NFTs, among other blockchain-based innovations, the metaverse streamlines asset ownership and transfers while at the same time eliminating intermediaries.

This is exactly what the real estate industry needed to become more cost-effective, user-friendly, and sustainable. It also mitigates traditional security concerns, such as manipulations, mismanagement, and lack of transparency. 

Despite their advantages, however, current solutions for on-chain tokenization face certain critical obstacles and challenges. These are primarily due to the siloed nature and low scalability of existing blockchains. Nevertheless, innovators are addressing these challenges promptly with protocol-level development. 

Tokenization Takes Real Estate to the Next Level

Tokenization streamlines the process of buying and selling real estate, but overall, it entails so much more. NFTs representing physical properties are accessible globally, 24/7, which helps these assets transcend geographical boundaries, opening up a brand new horizon for property owners, investors—and in fact, every stakeholder of the real estate industry. 

Traditionally, the real estate industry has been highly localized due to the nature of its deliverables. But with tokenization, these limitations no longer exist. This significantly broadens the market access and opportunities available for real estate buyers, sellers, and even developers. 

Tokenization enables fractional asset ownership, which further lowers the entry barriers. Whereas most people couldn’t afford real estate—especially in commercial settings—due to massive costs, they can now own such assets partially.

This also eases the selling process for high-value property owners, who traditionally faced challenges in finding buyers. Tokenization thus helps infuse much-needed liquidity into the real estate industry. 

Moreover, achieving regulatory compliance is much easier and hassle-free, since the legalities are embedded into the code of representative NFTs. In other words, dealings in tokenized real estate can be inherently compliant across jurisdictions. The risk of counterparties violating the contract is also non-existent, at least in principle.

Lastly, tokenization enhances the profitability of real estate by introducing novel revenue streams, enabling individuals to monetize their physical and virtual properties in ways which were previously unimaginable.

The metaverse, for example, allows individuals to rent out virtual land for conferences, concerts, and advertisements. Similarly, representing physical properties as NFTs broadens their horizon as revenue-generating assets, serving to compound their value in the real world. 

Real Estate’s Blockchain Transformation Promises a Simpler World

Blockchain has already displayed its potential to function as a single reconciliation layer for global finance—and thanks to capabilities like tokenization, those same benefits also apply to the real estate industry. The technology will bring unparalleled liquidity and ease of access to this domain, benefiting all kinds of individuals and communities. 

Particularly with futuristic standards like interNFT, tokenization can bring real estate to the masses like never before—and that, too, with unprecedented new levels of security and reliability.

The emerging paradigm of asset ownership will ultimately lay the foundations for a simpler world, ushering us into a future where physical properties are no longer restricted by physical barriers. What was merely science fiction some years ago will soon become a reality—it’s no longer a question of “if”, but “when”.