The magic that Bitcoin brought to the world is the undisputed transfer of value from anyone to anyone on the internet, at low cost and relatively high speed. Over the following years as experimentation increased with programmable Blockchains, the notion of being able to transfer real world assets in the same way captured the imagination of financial technologists and early adopter consumers. Highest on the list of such assets is real estate.
The global real estate market is estimated at USD 3.7Tr, making it the biggest available investment pool. But it is less easily transferable and requires a higher per unit purchase price than most other investment asset classes.
With the promise of the benefits of liquidity, transferability and lower fractional unit prices, real estate tokenisation also became one of the most hyped applications of Blockchain technology, at a time when both the technology and the regulatory environment were still in their infancy. It was right for the pioneers to experiment and future-proof themselves, but it was unrealistic to expect rapid mass adoption so early on. And so after the peak of inflated expectations came the trough of disillusionment. Meanwhile technological progress, legal knowhow, regulatory education and mass market adoption continue to grow. Such a complex industry needs educated participants in all parts of the chain. We already see increasing interest in real world adoption from a wider range of clients than the earliest real estate pioneers.
We now also see greater revenue potential for real estate registries and government agencies that embrace the technology, taking away from the profit pool traditionally reserved for lawyers. Today, when a title deed is legally able to be represented by an NFT, the ability to subdivide NFT ownership into fungible tokens (FT) can remove a layer or more of SPVs and legal structures, releasing legal costs and adding new potential revenue streams to the real estate registry.
Because tokens are software they establish a direct digital relationship between all stakeholders. This valuable direct communication channel can be harnessed by the issuer to deepen the relationship with its subscribers, among the subscribers themselves, and between all stakeholders and a regulator or government authority.
Leveraging the software properties of tokens creates an extension to an issuer’s digital presence, building lasting community relationships which reduce cost of sales with each new transaction.
The Tokengate platform has been built from the ground up to manage the full lifecycle of tokens and the relationship among stakeholders. This includes distributions, repeat transactions, Blockchain selection and security controls. The ability to issue and manage both NFTs and FTs under a unified issuers brand and user experience further future-proofs the platform for the evolution of tokenisation use cases.
As the industry matures, the technology is slowly fulfilling its promise of removing the middle-man and allowing greater value capture by government entities, issuers and investors. This was overhyped by the technology’s early evangelists, resulting in disillusionment by some of the earliest adopters. It is now solidly gaining traction as businesses explore its application for their economic advantage.