Key Concepts in Real Estate Tokenization

To fully grasp the power of real estate tokenization, it's helpful to understand a few key concepts:

•Blockchain: A decentralized, immutable digital ledger that securely records all transactions. It is the technology that underpins cryptocurrencies and tokenized assets, providing transparency and security.

•Digital Tokens: A digital representation of ownership in an asset. In real estate tokenization, tokens represent a fractional share of a property.

•Smart Contracts: Self-executing contracts with the terms of the agreement directly written into code. They automate processes like rental income distribution and ownership transfers, reducing the need for intermediaries.

•Special Purpose Vehicle (SPV): A separate legal entity (often an LLC) created to hold a specific asset. In real estate tokenization, the SPV owns the property, and investors own shares in the SPV.

•Fractional Ownership: The ability to own a portion of an asset rather than the entire thing. Tokenization makes fractional ownership of real estate simple and accessible.

•Liquidity: The ease with which an asset can be bought or sold. Tokenization brings liquidity to the traditionally illiquid real estate market through secondary market trading.