Influence of Blockchain Technology & Applications

Jan Veuger

ERES from European Real Estate Society (ERES)

Abstract: Blockchain might be the future of digitalizing assets into small pieces called tokens, of which the process is called tokenization. Transaction costs and speed are reduced, and entering into so called Real Estate Investment Trusts for investing in real estate are no longer an issue. Through tokenization, anyone from this planet can invest in real estate.Context: According to Savills (2017), the total value of world real estate reached $217 trillion in 2015. It only includes developed real estate and could have been much larger when we had counted the vast amount of non-developed land on the planet. One major boundary is the accessibility and the tradability of money. In the current situation, real estate is traded via Real Estate Investment Trusts (short: REITs). The problem with these REITs is the accessibility. Only the few people who can investment above the threshold can invest in real estate. Thereby, currency is another problem, because potential investors in Hong Kong cannot invest in Dutch real estate. This leads to a lack of liquidity on the financial real estate market. Blockchain might be the solution to this lack of global liquidity in real estate. In this way, real estate is purchased via smart contracts, traded via blockchain, and invested in by tokens: all very quickly. In this way, the world has no longer the financial borders from today. In theory, anyone can invest in real estate and make profit.The main question of this research paper is: In what way can tokenizing real estate by blockchain substitute the conventional way of investing in non-listed real estate?The sub questions of this theoretical framework in order to answer the main question are:What is the conventional way of trading non-listed real estate? How does this work? What are its boundaries? What is blockchain? How can it be adopted in real estate? What are smart contracts? What are its (dis)advantages? What is tokenization? How does it work? What are its (dis)advantages? What form of token is important in relation to tokenizing real estate successfully? What are the (legal) hurdles of tokenizing assets? What is the perspective of tokenization?

Keywords: blockchain; cryptocurrency; Ethereum; REITs; tokenization (search for similar items in EconPapers)
JEL-codes: R3 (search for similar items in EconPapers)
Date: 2019-01-01
New Economics Papers: this item is included in nep-pay
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