How Blockchain Can Make Real Estate More Accessible

Most people think about blockchain as a tool to buy and sell cryptocurrencies.

But blockchain technologies could transform investing in real estate, art and commodities through the tokenization of what are known as real-world assets (RWA).

Real estate is universally understood, essential and a core tenet of the American dream. But investing in real estate has a high barrier to entry because of how expensive it is. It also lacks liquidity because it can take a long time to sell.

Bringing real estate on chain could make the asset class more accessible to everyday investors who don’t have the funding to buy entire properties.

“Traditional real estate often struggles with poor transparency, illiquidity and multiple intermediaries,” according to Citigroup’s March report Money, Tokens and Games: Blockchain’s Next Billion Users and Trillions in Value. “Blockchain could be a good fit as a single shared source of truth in a market with multiple players, all working with overlapping data and the need for constant reconciliation. Tokenization could also help reduce minimum investment amounts and open up asset discovery.”

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Real-world assets are assets that exist in the physical world, such as real estate, commodities and art, but are put on the blockchain and used as a source of yield in decentralized finance (DeFi).

“You can tokenize a loan, a house, a building or car loans,” said Trevor Bacon, co-founder and CEO of real estate investing platform Parcl. “You can put that on the blockchain and it’s a much more efficient way to do stuff.”

Parcl bridges traditional real estate investments with cutting-edge blockchain technology to provide data-driven solutions for modern investors.

“We’re allowing people to speculate, hedge, bet and trade on real estate prices much like they would on any other type of stock or derivative,” Bacon said. “Real world assets is a new theme — it’s a moniker for what people are doing, using the blockchain for real utility rather than NFTs or gaming.”

The two main ways blockchain benefits the $327 trillion real estate market are that it replaces intermediaries with code, making it more efficient than standard record-keeping; and it settles transactions instantaneously on a public record that can be verified by all parties.

“From an operational perspective, it’s more efficient,” Bacon said. “It’s all done through software. You could issue a mortgage directly instead of going through a bank. It’s governed through smart contracts and enforceable by software, not people.”

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