The infrastructure for tokenization of real estate
Learn more about Cashlink's disruptive technology based on distributed ledger technology. It gives you the unique opportunity to revolutionize the real estate market.
Tokenization of real estate simply explained - a pioneering technology
When real estate is tokenized, it is fragmented using distributed ledger (blockchain) technology and then is mapped in the form of crypto securities (tokens). These tokens represent a share in the underlying real estate defined in the legal documentation and the associated rights and obligations. A so-called “smart contract” keeps a registry of the investors’ token holdings.
Why tokenize real estate?
Due to the high capital commitment, investments in the real estate industry remain reserved only for selected groups of investors. Therefore, the tokenization of real estate offers significant advantages.
Real estate use case
Real estate tokenization with Cashlink
Investments in real estate are becoming increasingly popular: Transaction volumes in the German real estate market are rising steadily and are expected to grow even further. Although interest in and demand for real estate is increasing, there are few suitable investors. Traditional real estate investments are highly illiquid and expensive due to many intermediaries.
Tokenization, or the digitization of securities, has the potential to permanently change the real estate industry. Tokenization uses blockchain technology: a distributed ledger secures identical copies of data across a network of authorized parties. This new and innovative technology helps issuers automate intermediate steps. This increases the liquidity of real estate, allowing new groups of investors to access the market.
3 steps of real estate tokenization with Cashlink
Step 1: Structuring
Step 2: Issuance
Step 3: Secondary market
Is it possible for real estate to be completely digitally tokenized?
Currently, it is not yet legally possible to tokenize a property natively in Germany. A land register entry is still required. In the land register, it is recorded in accordance with the law whether a property exists and who its owner is. Therefore, the real estate itself is not tokenized, but rather a company that owns the real estate.
Crypto securities are used for the tokenization of real estate, which include the customer’s right to ongoing income and increases in the value of the underlying real estate.
Is the real estate token equivalent to property?
Yes and no. In a sense, a real estate token represents part of the ownership of the real estate, as the holder of the token is entitled to a portion of the income from the real estate. However, the real estate token itself is not ownership of the real estate itself, but rather a debt agreement. The exact rights to a tokenized property depend on the specific terms of the token contract and should be carefully considered.
How can real estate tokens be structured?
There are several ways in which real estate tokens can be structured. The most common option is to acquire the property through a special purpose vehicle. The shares in this company are in turn covered by a tokenized debt security. The exact structure of the token model depends on the goals and needs of the issuer and should be carefully considered.
What rights does a share in a tokenized property give the investing person?
Real estate tokenization uses crypto securities that contain the customer’s right to ongoing income and appreciation of the underlying real estate.
Start tokenizing real estate
The possibilities of tokenized real estate are endless. Contact our team of experts to learn how your business model can benefit from tokenization!