It’s possible that outside factors can devalue the cost of the token or reduce that attractive rate.īut what if those same intermediaries invested a portion of their capital in commercial real estate-backed digital tokens? They’ll have a hard asset that provides some floor value to the utility token. And it’s all being serviced at the discretion of the lender. Like credit spending is to cash, tokens have little intrinsic value and are simply a function of money flows driven by borrowing and lending volumes. But those models are going further than the norms by providing preferred rates for depositors if they agree to earn and collect their interest income with the firm’s native utility token, allowing for more attractive borrowing rates.įor those who are looking at these novel banking opportunities, it may appear to be a fantastic deal, but there are vulnerabilities. It’s not hard to envision a scenario where real estate can be traded like stocks.īusiness models have emerged that are similar to a traditional bank, where interest rates are being charged for altcoin loans and the amount paid on the interest of altcoin deposits. Through tokenization, the hassles of investing in commercial real estate on a blockchain can facilitate secondary market sales through online quotation bureaus. Access to high-quality assets has been limited to high profile investors, while deals in progress are often held up by too many cooks in the kitchen. Traditionally, accessibility and liquidity have been the largest hurdles when investing in commercial real estate. In this way, the volatility of the entire portfolio is dampened versus one in which 100% has been allocated to cryptocurrency. Therefore, now is an incredibly advantageous time to diversify one’s digital assets portfolio into something that can hold up even as cryptocurrencies experience wild swings. While cryptocurrency valuations historically see massive ebbs and flows, comparatively, the evolution of commercial real estate value tends to be remarkably stable month to month, even during Covid, with an overall uptrend over a long period. Even more importantly, it offers stability. The global real estate market is over US$200 trillion and represents the largest asset class in the world, according to Savills World Research. Like many industries, real estate has been able to find ways to tokenize investments.

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