Opinion by: Darren Carvalho, co-founder and Co-CEO for Metawealth
During the Paris Blockchain week, Securitize Chief Operating Officer Michael Sonnenshein got headlines by rejecting real estate as a suboptimal asset class for tokenization. This is not the first time cryptoists are underestimating the benefits of bringing real estate onchain, and that’s probably not the last. While I respect Sonnenshein’s contribution to the adoption of digital asset, his assessment funds basic points of real estate tokenization transformative potential.
Real estate represents the world’s largest asset class and is expected to reach a value of $ 654.39 trillion this year, according to Statista. When industrial leaders claim that this massive market is not suitable for tokenization, they overlook today’s transformative infrastructure and the core value proposition that extends far beyond liquidity, which transforms access to the asset class.
Replacing traditional foundations
Sonnenshein claims that “good systems” already exist for traditional assets. He suggests that tokenization offers marginal improvements at best, but this assessment overlooks basic inefficiency in today’s real estate market, which tokenization addresses.
The current real estate transaction process involves weeks of paperwork. In the UK there are a number of purchase fees that can easily add 10% to the total bill. Settlement periods can expand to months, and complexity multiplies exponentially to cross -border transactions.
These are no less shortages. They are systemic failures that tokenization technology is uniquely located to solve. Take, for example, Smart Contracts’ ability to automate compliance, enabling verification and payment distribution while reducing fraud through unchanging registration.
Redefines demand beyond liquidity
When Sonnenshein says the “Onchain economy requires more liquid assets,” he interprets what everyday investors really require. For the 99%excluded from institutional quality investments, the primary task is not Bitcoin-like liquidity; It is meaningful access to an asset class that has built up more wealth than anyone else in the past century.
Traditional investment vehicles in real estate require significant amounts as minimum investments, accredited investor status and multi -year capital toe periods. These barriers effectively exclude teachers, nurses and middle -class families from participating in the most important property properties that have historically delivered uniform returns for investors.
Recent: Dubai Land Department begins real estate tokenization project
Tokenization basically changes this equation. Fractional ownership Through tokenization, investors can now participate with as little as $ 100, receive proportional income distributions and eventually act their positions in specialized secondary markets. The demand for this democratized access is huge, although the liquidity in the secondary market originally lagging behind liquid markets.
Translation problems? Not quite
Sonnenshein also suggests that tokenization does not “translate well” to represent ownership of real estate. This assessment overlooks Blockchain’s revolutionary capacity to enable fractional investments in properties that were previously only available to institutional investors.
Tokenization technology is just distinguished by creating transparent, secure fractional investment options with minimal overhead. A $ 50 million housing development project can be divided into 500,000 tokens, each of which gets an equal proportion of the rental price and potential appreciation. This lowers dramatic access barriers while maintaining the core benefits of the core benefits by real estate as an asset class.
This fractionalization basically transforms how humans can build wealth through real estate. Previously, Reits offered the only realistic path to diversified property exposure, often with high fees, no control and limited transparency. Tokenization allows investors to build personal portfolios across multiple types of property, all managed through a single digital wallet.
What does not “translate well” is not the technology. Outdated legislative framework and established business models withstand this necessary development. The UAE government recognizes this reality, supported by its recent initiative to tokenize $ 1 billion in real estate assets.
Building of tomorrow’s infrastructure
The conservative attitude towards RWA growth projections is missing out on the accelerating infrastructure development. Blackrock’s Tokenized Money Market Fund Buidl is quickly approaching $ 3 billion in assets, showing a significant institutional appetite on tokenized investment vehicles. This is not an isolated case.
UBS Asset Management, Hamilton Lane, Franklin Templeton and many more have launched tokenized investment vehicles, signaling a fundamental shift in how traditional funding places tokenization technology.
What critics consistently underestimate is the network effect of financial infrastructure. Each institutional participant not only adds linearly to the ecosystem. It increases exponentially connection and liquidity pools. We are witnessing the early stages of a self -reinforcing cycle where each new participant reduces friction for subsequent participants.
The narrative should not center on the current limitations. Instead, there must be a focus on what is being built. Secondary marketplaces optimized for real world assets emerge, legislative clarity increases in key jurisdictions, and each development strengthens the basis of mass recording at a pace that is likely to surprise today’s skeptics.
Democratized fortune creation
Institutional investors have had privileged access to the most profitable real estate investments for decades, while retail investors were limited to residential properties or high -fee Reit. Tokenization breaks this paradigm by giving someone the opportunity to build a diversified property portfolio that spans commercial, residential and industrial assets across multiple geographies.
When Crypto leaders reject real estate tokenization, which is based solely on liquidity metrics, they use the wrong measuring standard. The transformative potential lies in democratizing access to an asset class that has created more millionaires than any other investment vehicle in history.
Endgame of Real Estate Tokenization makes ownership of institutional quality available to everyone. The adoption of tokenized real estate and other assets in the real world continues to grow despite skepticism from leaders who miss the forest for the trees.
Opinion by: Darren Carvalho, co-founder and Co-Ceo for Metawealth.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts and statements expressed here are the author’s alone and does not necessarily reflect or represent the views and opinions from Cointelegraph.