A Few Reasons Why the Market is Moving Toward Tokenization
Tokenization is the act of transforming any rights or assets into a digitized token which can then be utilized, acquired, and exchanged by the holder via a blockchain even without a third-party intermediary. https://nobsimreviews.com/how-to-invest-in-gte-technology-jeff-brown claims tokenization enables you to own everything from works of art to real estate, software applications, a car, a racehorse, even rookie cards. Tokenization, on the other hand, is not without its difficulties. From investors to issuers, various barriers must be overcome:
- Regulatory framework: In the absence of common industry standards or homogeneous regulatory frameworks, the adoption of tokenization, which is essentially a model that operates according to a single worldwide standard, becomes difficult.
- Scalability: Validation and encrypted durations into the different blocks in the chain are lengthy, making scaling a key barrier that must be resolved further.
- Cyber security: Setting up effective cyber security measures is difficult due to several reasons, including the mix of a centralized and decentralized system.
Here are some of the ways blockchain has altered the real estate market.
Marketplaces and platforms
Historically, real estate technologies have been focused on listing and integrating buyers and sellers. However, blockchain presents new ways to exchange real estate and can enable trading platforms and online markets to more thoroughly support real estate transactions.
Real estate has traditionally been seen as an illiquid asset due to the time it takes for sales to be completed. This is not the case with cryptocurrencies and tokens, which may theoretically be swapped for fiat currency on exchanges. Real estate, on the other hand, maybe easily traded as a token.
It enables fractional ownership of assets, which might lower investment barriers and promote quite inclusive access by individual investors to initially costly or inadequately divisive asset classes, enabling global pools of capital to access components of the money system reserved solely for big investors.
Middlemen are being eliminated
Transactions in a blockchain are validated by dispersed nodes, and anybody can enter or exit the network at any time without interfering with the network’s capacity to create consensus on transactions. Rather than relying on a single system to handle activities, we may make use of a global computer. Middlemen will be eliminated, trust will be preserved, and value will be traded on a global scale.
Increased Investor Base
Historically, the extent of fractionalization in the trade of real-world assets has been limited. Because investment quantities and holding periods might be decreased, tokenization could extend the investor base and bring additional actors into the scene. The token details will be made public, and it will only be sold to companies that have through a proper KYC & AML process, as well as being recognized as sophisticated investors.