Evolution of Ownership and Investment

The traditional ways of ownership and investment are evolving, as the digital innovative ways are emerging and changing the landscape of the investment world. 

During the 20th century and early 21th, ordinary people and investors followed the old days methods to purchase a property or invest in a particular market. 

Basically, people must have the required cash to buy an apartment or invest in the real estate sector, but blockchain technology has changed the game. Now let’s dive deep and see how blockchain impacts the real estate sector in terms of investment and ownership.

How blockchain revolutionizes the traditional ways of ownership and investment?

Blockchain as a breakthrough to the digital world, brings lots of applications to the markets. Cryptocurrencies, NFT or Non-Fungible tokens and Defi and its application in the real estate sector are just a few out of many  that are all blockchain based. Asset-backed NFT as another application  refers to tokenizing an asset within a blockchain network and putting it up for trade between interested users. The process can be converting a valuable asset like a property in Dubai or a piece of diamond to single or multiple NFTs. It goes without saying that such a feature makes many interested people capable of investing in their desired market on a fractionally basis. In other words, people who are interested in an expensive product like diamonds to invest in, will be able to purchase a fraction of a piece of diamond by purchasing a diamond-backed NFT. 

What are the impacts of blockchain on real estate ownership?

Asset tokenization changes the definition of ownership and investment across different markets in general and the real estate market in particular. Blockchain makes the real estate sector more efficient by improving and changing the traditional ways of investment or ownership across this popular market. Here are the main benefits:

• Fractional Ownership

Property tokenization makes fractional ownership possible in a secure and easy way. Think of a luxurious Villa in Palm Jumeirah that normally costs at least USD 7 million. Not many people are able to buy such a property for investment purposes. However, it is now possible to convert the same villa into say 1 ‘000 NFT, each worth     USD  7’ 000. Now, many people are able to invest in such a valuable property and become a fractional owner. Besides, they would enjoy a passive rental income of that property on a pro rata basis.

• Owning a property becomes cost-efficient

Investing in a property comes with a considerable amount of side costs. Lawyers, banks, accountants, brokers, etc charge buyers for their service. Blockchain has eliminated those intermediary costs by utilizing smart contracts to take care of all required actions. Today, the whole process of buying a property NFT from terms and conditions all the way through money and ownership transfer is done by smart contracts. Hence, there is no need to pay for such services to middlemen. 

• More Transparency and Better Security

Blockchain, due to its decentralized nature is quite transparent as well as more secure. While cloud based databases are at the risk of cyber-criminal activities because of centralization, data on the blockchain faces less risks, as it is stored in multiple computers across the globe. Hence, while data on blockchain cannot be changed or replicated, they are available to all blockchain users with no limitation, so the transparency is at its highest level.

• Global market with 24/365 access

Unlike traditional markets, NFT marketplace never closes, as it operates 24/365. Besides, the market is borderless and people from all around the world can trade across the blockchain based platform.  For instance, an interested user from somewhere in  South America is able to invest in a tokenized property in Dubai. In other words, blockchain removes the borders for investment and ownership purposes. How good is that?

Bottomline

Blockchain is changing the landscape of investment and ownership by introducing innovative applications to all markets. Nowadays, there is no need for investors or interested people to have access to hundreds of thousands of dollars to become capable of investing in the real estate sector or jewellery products. Asset tokenization has revolutionized the ownership concept and people can become a fractional owner of every asset in the market. Even though the asset tokenization concept is at its early days, the future looks bright and it seems like the world is moving towards the new determination of ownership and investment.