real estate are both more abstract and more permanent and real. Nonfungible tokens (NFTs) are smart contracts that represent ownership of an asset. These are the hottest types of crypto assets this year. Numerous platforms have been developed to support creation of NFTs. And earlier this year, an apartment in New York City was sold with the ownership represented as an NFT. NFTs (or some other form of smart contract) are already becom- ing the backbone of title systems in several countries and individual counties in the U.S. are experiment- ing with them. NFTs have several advantages over current title systems. They are immutable (no more worries about courthouse fires or inatten - tive clerks) and can be exchanged without the involvement of a third party. Once a title system is based on NFTs, it will be easy to search title and much harder to challenge title from some historical claim. The details of the title may become dig- itized objects so that looking up the boundaries, the ownership history, the easements, and any liens may become much easier without the need for specialists. Title insurance will become focused on defending new infringements rather than pro- tecting overall claims. Similarly, security token offer- ings (STOs) are poised to replace current approaches to syndication. STOs represent partial ownership in properties and properties with ownership sold as STOs have all the benefits of syndication with the addition of easier liquidity in a secondary market. STOs can auto- matically enforce securities regu- lations – from multiple countries at the same time – providing better compliance and enforcement. And as more real estate becomes toke-
nized, the secondary market will be rich in opportunity for investors of all income levels to own part of high quality commercial real estate. It may become common to invest $100 in an apartment building or a shopping mall. Institutional quality real estate could become available to everyone without the high REIT man - agement fees. When we combine these trends, the future of owning real estate looks like real estate title as an NFT. The NFT is syndicated and tokenized into large numbers of small pieces of ownership and all those fractional interests are tradeable on secondary markets providing whole new ways for real estate investors to own real estate and diversify their portfoli- os. All these ownership pieces are immutable and protected by strong cryptography. They may even be pub- licly maintained worldwide so that real estate title becomes a global property and not a national one. This is one potential future. Reg- ulation could prevent it —though it
Steve Streetman is a real estate consultant specializing in deal structuring and the use of cryptocurrency. Look for his book, “Cryptocurrency and Real Estate: How to Profit as Bitcoin and Blockchain transform real estate investing” available now on Amazon in paperback and ebook formats. You can also find out more at https://www.CryptoREBook.com. Contact him for more information about the World Homes Initiative or the Hemp Powered Community. doesn’t now. Having property owner- ship tracked on a global blockchain arguably threatens the sovereignty of nation states. No doubt they will fight it. But if the blockchains remain decentralized so that there is no one to imprison or sue, it may be hard to prevent the democratization of real estate ownership. It will be an interesting ride the next few years as waves of innovation build on the amazing creativity already unleashed over the past four years. Learn now about NFTs and STOs so you can ride that wave to profitability. •
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