Block by Block: Blockchain Technology is Transforming the Real Estate Market

Property is the world's greatest store of wealth, and if the cryptocurrency and blockchain world is looking for an express route to mass adoption, it could do worse than partnering with the real estate industry.

According to a September 2021 report by Savills World Research, the estimated value of all real estate globally is $326.5 trillion. By comparison, the market capitalization of the crypto sector was around $1 trillion in mid-July.

In addition, the real estate market – at least its commercial real estate segment – ​​is also characterized by costly barriers to entry and asymmetric information that favors insiders. Its fees are high, the administrative formalities onerous and the deeds are sometimes defective, falsified or missing. Some properties can take years to move – another way of saying its market is illiquid. All in all, it's no surprise that many believe this market is ripe for disruption, especially thanks to blockchain-enabled tokenization.

This notion of real estate tokenization is not entirely new. As early as 2019, for example, a 6.5 million euro villa in Boulogne, in the Paris region, was symbolized. One million shares have been put up for sale on the Ethereum blockchain, the first property in France ever sold in a blockchain transaction. A private individual could have bought part of the luxury villa for only 6.5 euros.

Will everything be split?

Last year's breakthrough of non-fungible tokens (NFTs) - and the real properties are not fungible, i.e. not interchangeable - as well as some more favorable regulations, such as the Crowdfunding Regulation (Reg CF) in the United States, have turned the spotlight more directly on crypto and real estate partnerships. The hype for this year's Metaverse, including Yugo Labs' record virtual land auction, hasn't deterred activity in the real estate world either.

“Web3 will be all about ownership, fractional stock ownership,” says NiftySky DAO Founder Bobby Singh, speaking at the NFT.NYC 2022 convention in June, which featured a full track on tokenized real estate. "Imagine dividing the Empire State Building into 2 billion shares." An individual could own a piece of the Empire State Building for several dollars.

Times Square at the NFT.NYC 2022 convention

Ownership creates its own momentum, Singh continued. "If you become a collector, an owner, you are more likely to talk about it." More owners mean more excitement. "The notion of title is very important."

"Block...