89 percent of all security tokens exchanged are for real estate, implying that the blockchain sector may be prepared for increased adoption of real estate NFTs.
Real estate is an asset type that is ready for blockchain integration. Security tokens fall into a variety of sectors, but real estate is the most prevalent. The Research Terminal is now presenting a 33-page analysis from Security Token Market, a data and media company, on the current condition of real estate security tokens and their prospects for continued adoption.
If you work for a real estate firm or have a portfolio that includes real estate, this report contains the information you need to stay current on this industry transition.
The real estate business is being transformed by blockchain technology
Nonfungible tokens (NFT) have been gaining popularity in recent years and are expected to reach new heights in 2021. One of the criticisms levelled towards NFTs is that they are employed exclusively for pixelated JPEG images and have no “real world” uses. Those familiar with the blockchain and cryptocurrency world are well aware that the application of NFTs extends well beyond pixelated apes and Shiba Inu jokes.
The paper delves deeper into the use of blockchain-based real estate tokenization projects now underway. The paper provides a description of the major tokenized real estate market, 14 active enterprises operating in this field, and the secondary markets for these real estate tokens.
The ideal use of blockchain technology
Security tokens are used in a broad variety of industries, from fine art to wine and insurance, but none is growing at the rate at which the real estate sector is, accounting for 89 percent of all traded security tokens. Residential real estate accounts for 87 percent of the 89 percent, whereas commercial accounts for only 2% of what has been transferred as a security token. The worldwide real estate industry was estimated to be worth $3.38 trillion in 2021, and with the proliferation of blockchain-based applications, it’s unsurprising that the crypto revolution will find its way into real estate.
Title and property ownership are well-suited for blockchain applications, as the systems that comprise the exchange process incorporate triple-ledger accounting (who sold, who bought, and signatures). The technology’s verifiability and trust lessness make it suitable for reducing the numerous transactional hurdles that afflict the traditional real estate industry.
Consider title searchers and the insurance process. Mortgage lenders and buyers must invest time and money in conducting a title search on a property to confirm that the seller has the legal authority to transfer property rights to the buyer. With a tokenized property asset, doing a blockchain search becomes trivial. This is only the tip of the iceberg when it comes to real estate tokens. To learn more, purchase the report.
Emerging and nascent, but growing
On the Ethereum network, the first property was created as an ERC-20 token in 2019. While it may appear as though adoption is proceeding slowly, it is worth noting that the real estate market is highly regulated. When you combine this element with the rapidly rising decentralized blockchain business, you get a prescription for slow growth – at least initially.
According to the report, the number of actively traded real estate tokens surged by 107 percent year over year in 2021. Active projects include commercial hotels, private estates, Section 8 and affordable housing, purchasing interests through a blockchain IRA account, and insurance. As illustrated in the graphic below, the majority of activity is concentrated on the residential rather than commercial side.
The process of tokenization adds liquidity to the real estate market, which has historically struggled with liquidity. Investors can also benefit from this by identifying income creation opportunities through various fractionalizations of property on the blockchain, thereby removing cumbersome and expensive entry hurdles.
Real estate on the blockchain is rapidly approaching
Serious investors should study the Security Token Market real estate report. Both early adopters and others who are unaware of this paradigm shift can benefit from maintaining current on the newest developments outlined in this research. Every industry undergoes transformation, and real estate is no different. Anyone involved in real estate will benefit from the insights contained in this study, as they will assist them in maintaining their competitive edge in the industry.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.