Design & Multimedia / Make or edit a video
By way of background. Coparing the Old way of purchasing real estate to the New way please see my notes
Turning The Real Estate Sector On Its Head Through Asset Tokenization
The benefits of asset tokenization most clearly apply to asset classes that are typically considered illiquid and can benefit from improved transparency, efficiencies, and lower minimum investments. The real estate industry is particularly pertinent when considering the possibility of tokenization.
Imagine you want to invest in real estate, but you want to start small and incrementally increase your investment.
Perhaps you wish to begin by investing in a $100,000 apartment; tokenization means the value of the apartment can be broken into, for example, 100 tokens (the number is totally arbitrary). In this scenario, each token represents a 0.01% share of the apartment and when you buy one token, you actually buy 0.01% of the ownership in the asset.
Buy 50 tokens and you own 50% of the asset; buy all 100 and you have complete ownership of the asset.
The inherent immutability of a public ledger ensures that once you buy tokens, your ownership of the asset cannot be manipulated or tampered with, it is indisputable. Rather than requiring very large investments, or tying up your money for extended periods of time, tokenization permits you to invest in whatever asset you are interested in and easily trade the token at your discretion.
The ability to freely choose where you invest will open up a new era of much greater personalization and customization in investment.
Tokenization is the process of representing fractional ownership interest in an asset with a blockchain-based token. A blockchain is essentially a distributed database of records, or public ledger of all transactions or digital events that have been executed and shared among participating parties. Each transaction in the public ledger is verified by consensus of a majority of the participants in the system.1 In the context of real estate, tokenization allows individuals and entities to own a fraction of a real estate asset using a secure and verifiable protocol—a process that was impossible prior to blockchain technology.
Perhaps one of the greatest benefits of tokenization is its ability to bring liquidity to assets that are illiquid or otherwise nontransferable. While liquidity may be defined in various manners, in general, liquidity is the degree to which an asset or security can be quickly bought or sold in the market at a price reflecting its intrinsic value. By its very nature, real estate assets are illiquid due to a number of factors, such as difficulty of transacting and access to capital.
Blockchain has the potential to address the issue of liquidity. For example, a U.S. Dollar can only be broken down to $0.01, but tokens can have up to 18 decimals.
This newly created system increases the amount of potential liquidity in the market. Unlike before, this permits individuals and entities from different geographic and financial backgrounds to invest in a basket of real estate assets that perhaps were once too expensive.
The use of blockchain-based smart contracts similarly has the potential to improve the speed and efficiency with respect to real estate transactions.2 Unlike a standard contract that outlines the terms and conditions of a relationship—often governed and enforced by law—“smart contracts” enforce a relationship with cryptographic code.
Smart contracts have the ability to function as multi-signature accounts so that funds are only spent when a certain number of people come to a consensus, provide utility to other contracts, and store information about an application similar to membership records.3
Currently, a real estate transaction involves many participants, including buyers, sellers, brokers and banks. A blockchain-based smart contract eliminates the need for intermediaries and expedites the overall process. For example, the seller may upload all of the details of the real estate asset and the buyer puts all of their information on a 100% encrypted and secure block.
The blockchain protocol will verify the information by both parties and facilitate the transaction without an intermediary. In sum, real estate transactions based on smart contracts offer substantial benefits unseen before, such as:
• Enhance speed of transactions
• Reduce overall real estate costs
• Eliminate intermediaries and middlemen
• Substantially reduce fraudulent conduct stemming from forged documents
Category: Design & Multimedia
Subcategory: Make or edit a video
What do you need?: New video and footage
Is this a project or a position?: Project
Required availability: As needed
I will provide: Animations
Duration: Between 1 and 3 min
Adobe After Effects