Real Estate Tokenization 101: Understanding The Basics
The most transformative trend in the investment real estate industry today is real estate tokenization. Let’s simplify this concept to better understand what tokenizing real estate is and the benefits for investment properties. Consider a gold bar that you decide to divide into many smaller pieces, like coins, to make it easier for more people to own a piece of the gold. Real estate tokenization works in a similar way, where a property is divided into digital shares, or tokens, that each represent an ownership stake in the property. Although these digital security tokens for real estate are managed on blockchain technology, the backbone of cryptocurrencies like Bitcoin, they are not a cryptocurrency like you read about in the news or buy on Coinbase. Instead, these are Real World Assets or RWAs and when pieces of ownership are sold like in the gold coin example above, they are securities.