Whether buying, selling or tokenizing real estate, the property market and blockchain are deeply intertwined. As the purchase of property has become possible with bitcoin, so has the wider potential of blockchain technology to transform the industry. The convergence of real estate and cryptocurrency is no longer the stuff of idle speculation, but a growing sector that has already begun to bear fruit.
Also read: Buying and Selling Property With Bitcoin Is More Complex Than It May Seem
From Buying It With Bitcoin to Tokenizing It: The Evolution of Real Estate
“Few assets, except for possibly fine art, are more illiquid than real estate,” observes Marvin Steinberg, explaining the conditions that prompted the property industry’s tokenization. The founder of STO advisory firm CPI Tech continues, “If you’ve got a $10 million waterfront development and you want to sell it, you’ve got to find another buyer with $10 million to spare. There aren’t a lot of people with that level of funds on hand. However, take that development, tokenize it, split it into 10 lots, and now you only need to find buyers with $100K to spare. If you need to free up funds at short notice, you don’t have to offload the entire development; now you can liquidate one of those shares, and can even buy it back at a later date.”
The cross-pollination between blockchain and real estate can be traced back to at least 2013 when Ragnar Lifthrasir created the International Blockchain Real Estate Association (IBREA). As a purely educational resource, IBREA may not have grabbed many headlines in its own right, but it indicated that interest between these sectors was already fomenting. That mutual curiosity took some time before it developed into keys and coins being swapped, but when it did one of the trailblazers in the market was Bitpay.
In January 2017, the COO of Bitpay, Sonny Singh, reported that in one property purchase in which the company had been involved, the seller made an extra $1.3 million. As Singh explained it, the property was valued at roughly $4million, but after completion, the price of BTC rose from $750 to $1,000, making the seller a tidy 25%. The rest of 2017 proved to be a good year for the company, which processed $20 million worth of real estate deals. Apart from Bitpay, the bull market of 2017 also saw co-living project The Collective accept bitcoin deposits from September, and in October a London mansion was advertised for £17 million, exclusively for purchase in bitcoin.