Tokenization of real estate assets thanks to Blockchain technology

What is tokenization?
In simple terms, tokenization of an asset is the process of using a blockchain-based security token that digitally represents that asset. These tokens can then be traded on a secondary market. However, this is obviously not a new concept, as it is a twist on a more well-known concept called securitization. So before we discuss the benefits of tokenization, let's first understand what securitization means. Securitization is the process that groups together various types of contractual debt obligations (CDOs), such as mortgages, auto loans, or credit card debt, and sells their related cash flows to third-party investors as securities.

Advantages of tokenization
# 1 Decentralized:
One of the most important things about the data stored on the blockchain is that it is not centralized. A network of nodes that generally spans the entire world maintains a copy of all the data stored within the blockchain. Also, the main advantage here is that it does not have a single failure mode and is free from cyber attacks.

# 2 Ecosystem without trust:
One of the most fascinating traits of the blockchain industry is its lack of trust. In a decentralized system, you don't have a centralized entity that you have to trust to do your job. Decentralized networks use consensus algorithms to make decisions that circumvent the need for trust.

# 3 Transparency:
Blockchain technology also happens to be transparent. As long as you are part of the network, you will have access to all the data stored on it.

# 4 Safety:
Blockchain technology is immutable due to its clever use of cryptographic hash functions. In simple terms, the data stored on the chain cannot be tampered with, making blockchain the most transparent and secure storage system in the world.

# 5 Fractional ownership:
Tokenization organically leads to facilitation of fractional owners. This means that now a group of buyers can acquire a real estate asset. Since the asset can be named to any number of tokens that represent ownership, this gives them fractional ownership.

# 6 Liquidity:
The high price and construction time associated with real estate means that developers and investors have to invest for years, even decades. Then finding buyers willing to offer the right price increases additional waiting periods. Through tokenization, it will be possible to sell the property's tokens on the open market, allowing for faster transactions.

Is tokenization that simple?
Well, no. While it may sound great and easy to implement, the fact remains that there are many pitfalls when it comes to the proper implementation of tokenization. First of all, the token must be accessible on the public blockchain. This also includes any smart contract logic that the token needs to fulfill its intended function. The token sale must be registered by regulators and listed on major highly liquid exchanges. Issuers and users must approve Anti-Money Laundering ( AML) and Know Your Customer's Standards (KYC).
 
Discover our Mind Session The DigiShares Platform

DigiShares provides a white-label platform for digitizing securities (shares, bonds, etc.), issuing these in order to raise funds for a project, and the longer term management of a group of tokenized investors. DigiShares' platform can be used for any type of fund-raise (STO) but as a company DigiShares is focused on real estate projects. This document is as well focused on this industry. The DigiShares platform is "white-label" meaning that it is often sold to partners who offer the platform under their own brand-name.
The DigiShares platform can be used in connection with fund-raising but it can also be used in connection with the tokenization of existing real estate funds, in order to create more liquidity among existing investors and make it easier to on-board new investors.

The DigiShares platform provides a lot of functionality, however, the most important to mention is that it supports two main processes: (1) the issuance process where tokenized securities are issued in order to fund-raise for the project, (2) the longer term management of a group of investors who are holding tokens to document their ownership of securities within the project.

For the issuance process we support a customized on-boarding process where KYC and AML options can be adjusted to the specific jurisdiction of issuer and investors. The investor has his own dashboard where he can view his token holdings, communicate with the issuer, vote on relevant issues such as how to renovate a building, purchase more tokens, etc.