It's already been done! In 2017, TechCrunch founder Michael Arrington sold his Kyiv apartment in the world's first NFT Real Estate Auction (https://propy.com/browse/propy-nft/). You can also read more about it here. In 2022, we saw the first US NFT real estate sale in the state of Florida, and then another NFT RAS (Non-Fungible Token Real Asset Sale) in South Carolina later in the year, sold by Roofstock. The reality is that society has already made the jump to accepting not only crypto, but also NFTs as proof of ownership for real estate. Since this is the future reality that is coming at us faster than we can imagine, why not bring in DeFi, another avenue of profitability for anyone with equity?
Tokenizing real estate will bring liquidity of capital and fluidity of value to an ecosystem that is extremely slow and cumbersome. Anyone who has purchased a home knows how slow and long the process can take. Even if we brought all elements of real estate onto the blockchain, it would still seem slow when purchasing a home. We could probably cut the time down to a quarter of what it traditionally takes, as there will almost always be human elements that slow down the process.
By tokenizing real estate, loans can be processed and funded in hours, or even minutes, rather than weeks. Blockchain technology will bring elements of information onto the chain that will always be there and continually updated, which can be pulled from for approval and protected from nefarious players who have no business seeing it. AI will auto-update and maintain property values, so that when the owner wants to borrow, the only questions are how much is allowed and how much the owner wishes to borrow from an auto-approved amount. Instant approvals and instant cash in an industry that is plagued with time-consuming processes. Crypto can fix all of this.
If all of this wasn't enough to help the real estate industry, now comes the greatest benefit of tokenizing real estate: more profits. If the DeFi summer of 2020 hasn't shown us anything about really cool fintech, it has shown us how to bring more ways of making money into crypto. Now, property owners will be able to stake and earn from the equity up to 100% of the value in a piece of real estate. In crypto, staking is like depositing money in a bank to earn interest. In the United States, the Federal Reserve System allows banks to practice fractional reserve banking. This system allows the banks to use your money to lend more money and earn more money. In crypto, staking allows smart contracts to use staked money to make money for both the smart contract and the staked value through lending and AMM's. Far more interest, rewards, and profits than a bank would ever grant.
If a lot of this information is over your head, please refer to our learning section to get a better idea of terms such as: