Unless you have been living under a rock then you have heard of the NFT as a way to make money with Real Property. Did you know that blockchain has the potential to transform the way we invest in physical assets? Unlike the jpegs you have heard of making 69 million on auction, we are talking about Real Property NFTs tokens that are actually tied to the value of the asset. Blockchain has strong potential in real estate investing because it mitigates many of the asset class’ hurdles. Here’s a brief round-up of its theoretical advantages:
Real Estate Tokenization – Liquidity
Buying and selling real estate is normally a tedious process. If a property were to be tokenized, it would essentially cut out the middleman and allow buyers and sellers to transfer ownership directly.
Democratizing Investment
If tokenization proves to be effective, it could be extended to a whole range of other physical assets—most of which have their own unique barriers. Consider the following table, which lists the 12-month and 10-year return of various luxury goods.
- Handbags
- Wine
- Collector cars
- Watches
- Rare whisky
- Art
Rare luxury goods have historically been sold through live auctions, where the highest bidder is awarded ownership. Thanks to blockchain technology, this could change in the future. In fact, Sotheby’s (a 277-year-old auction house) recently began to accept cryptocurrency as a payment option in its auctions.
In short, tokenization has the potential to greatly reduce the barriers around alternative and physical assets. For investors, this means a much wider set of opportunities to pursue.
