Real estate is an asset class that is ideal and ready for integration with blockchain technology. Notably, the security tokens cover most of the categories but they are dominated by real estate. Security Token Market is a data and media company that covers the current state of real estate security tokens and the possibility of continued adoption.
There is a significant shift in this developing sector ever since the blockchain and other related technologies and platforms came up. Interestingly, 89% of all the traded security tokens are for real estate. This means that the blockchain sector might be ready for more adoption of real estate NFTs.
Blockchain Is Revolutionizing The Real Estate Space
Since the start of 2021, nonfungible tokens (NFTs) have been gaining popularity and new heights are being achieved as more sectors of the global economy adopt the nascent technology. Some of the negative reports on NFTs are that they are only used for pixelated pictures of JPEGs and do not have any ‘real world’ applications.
Anyone familiar with the blockchain and crypto sectors knows that the use of NFTs spreads way beyond the Shiba Inu memes and pixelated apes. The research goes deeper into the use of blockchain projects that are currently tokenizing real estate.
The general overview of the current state of the primary tokenized real estate market, 14 active projects working in this sector, and how the real estate tokens are trading on the secondary markets.
The Ideal Application Of Blockchain Technology
The use of security tokens covers many industries ranging from wine, fine art, to insurance. However, none of them is growing as quickly as the real estate industry which accounts for up to 89% of all the traded security tokens.
Breaking down this 89% further shows that residential real estate accounts for 87% while commercial real estate takes just 2% of what was transacted as a security token. In 2021, the global real estate market was estimated to be worth $3.38 trillion, and with the surge in different applications that use blockchain technology, it is not surprising that the cryptocurrency revolution would eventually trickle into real estate.
Ownership of property and title is perfectly suited for blockchain applications, as triple-ledger accounting; who sold, who purchased, and signatures; is developed directly into the systems that constitute the process of exchange.
The authenticity and trustlessness of the technology make it perfect for eliminating various barriers to transactions that affect the traditional real estate industry. A good example is the title searchers and the process used in insuring them.
It takes time and money for the mortgage buyers and lenders to go through a title search on a property to guarantee that the seller has all the needed and legal ability to transfer property rights to the buyer. With a tokenized property asset, it becomes a simple task of doing a blockchain search. Experts say that it is just the tip of the real estate token iceberg.
Budding And Emerging, But Thriving
In 2019, the first property was minted as an ERC-20 token on the Ethereum blockchain. While it might appear to be a slow start to adoption, it has to be noted that the real estate sector is majorly regulated. Combine that factor with the growing decentralized blockchain sector, and you will have a perfect recipe for slow growth, at least at the start.
The report states that the volume of actively traded real estate tokens grew in volume by 107% in 2021 from the previous year. The active projects involve various facets like a private estate, hotels, Section 8, and affordable housing. It also features buying interests via a blockchain IRA account and insurance. Notably, most of the activity is majorly on the residential side as opposed to the commercial industry.
This tokenization process adds an element of liquidity to the real estate market that historically has been a major issue for the industry. Investors can also from the scenario by looking to ferret out yield generation with various fractionalization of properties on the blockchain, getting rid of complicated and expensive hiccups to entry.
Real Estate On The Blockchain Is Growing Rapidly
The Security Token Market real estate report is important for serious investors to read. The earlier adopters and the people unaware of the sea change can benefit from staying informed on the latest developments that are highlighted in various studies.
All sectors change, and real estate is not an exception. Anybody who is involved in real estate benefits from the insights offered by various studies to maintain their competitive advantage in the marketplace.