In the traditional days, from banking to maintaining small records everything was done manually needing more manpower and time consumption. People felt the drawback of time wastage when the output could have been more desired. After the invention of computers and intelligent screens, everything changed like magic! The hectic and long records became easy to maintain and the time consumption and the manpower required became less. With the revolutions in the digital era and formally the launch of the digital revolution many new technologies became available that decreased the cost and non-availability of technology. Are you considering investing in cryptocurrencies but unsure of how to increase your profits? Learn these tips for successful cryptocurrency investment.
Tokenization is one of the part and parcel of this digital revolution and has a close concern with real estate. The meaning of tokenization is digitization and just like other records, the records of real estate can be managed easily following this trend. In this article, we are going to discuss some of the facts and figures of tokenization that can help a beginner to understand and learn the process.
About Real Estate tokenization-
The field of real estate depends upon maintaining the correct records in either a chronological manner or depending on the developmental phases that occurred. Tokenization in real estate refers to the digitization of real estate properties and their records thereof. The division of properties in digital tokens that have records of ownership and the relationship of the owner to the property either directly or indirectly is mentioned in the process. These tokens are not merely digital assets but behave more like economic one as the prices are derived from the physical properties and are attached to the token. These can be closely related to smart contracts as some of the properties and concerns are in close association with these too.
Kinds of real estate tokens
Mainly there are three types of real estate tokenization
- Residential type tokenization- The real estate properties of the residential kind is differentiated in this class. The most widely used as compared to other types of tokenization are none other than residential types.
- Commercial type tokenization- Commercial real estate properties find their place in this type of differentiation. It involves some more provisions to be followed in respect of commercial properties and proper records have to be maintained.
- Trophy-type tokenization- The places of high interest and luxurious nature find their place in these types of tokenization. The valuation of these tokens is important in the sense that these properties have their value underlying, so need proper care.
Steps involved in tokenization
- Basic structure formation- The first step designated in the form of structure formation is considered the most important one in the entire tokenization process. The selection of token type is made in this step and can provide liquidity for the present investors.
- Digital creation- The record or the piece of information that needs to be tokenized is finally uploaded to the blockchain structure and the type of fund required is also selected in this step.
- Technology selection- This is not a single step but a combination of several processes involved in the form of selecting blockchain, its custodian solution, the proper marketplace, and finally its marketing and distribution in the entire network.
Advantages of tokenization
- Less or nil paperwork is required while performing the process of tokenization. As the process is completely digital, so the use of paper is a waste.
- The disadvantage of losing liquidity as in physical standards can be completely avoided in the process of tokenization.
- The efficiency is overall increased, which can prove to be the backbone of the entire real estate structure.
- Human error is removed as the processes are completely automated and require the use of AI and more.