Digital assets have become an increasingly popular way to fund business ventures and investments. You’ve probably heard of non-fungible tokens (NFTs). These digital assets, often tied to a piece of art, or perhaps a tweet, took the world by storm in 2021.
Another exciting prospect for digital asset financing is the real estate arena, which has been taking at aim at traditional investing with blockchain, making real estate transactions more secure, efficient, and accessible.
What are digital assets?
Digital assets are blockchain-based tokens that represent ownership of a particular asset, such as real estate. These tokens can be traded on digital asset exchanges, enabling investors to buy and sell them just like any other asset.
Asset-backed tokens are a digital investment option that offers enhanced security over other digital investments. This is because they are linked to tangible underlying assets, which ensure fair market coordination through automatic mechanisms.
DigiFunds has built an asset-backed fundraising platform that enables businesses to obtain sustainable and significant capital funding to scale and expand their operations. This secure model facilitates the Initial Coin Offering (ICO) process and provides businesses with the financial backing they require to take their venture to the next level.
Asset-backed tokens also provide a unique opportunity for investors from all backgrounds, regardless of their level of experience with digital assets. Users can invest in promising ventures with tangible currency, which is subsequently converted into digital tokens and invested in the business of their choice.
The benefits of digital assets for real estate ventures
Asset-backed token investment for real estate ventures can bring many benefits. The fluid nature of digitizing real estate assets reduces steps and legal hurdles that often need to be overcome, as well as fewer intermediaries involved, which increases liquidity.
Fractional ownership is also a plus point with asset-backed token investing in real estate. Splitting ownership into digital tokens means buyers can buy a small portion, shrinking costs and barriers to entry. It is unique in the fact that it is a shared platform, meaning that anyone interested can invest. There is a much greater fundraising potential because the number of potential investors is unlimited. A shared investment model creates more workable funds, which means more moveable capital for investors to channel into growth.
Cost reduction is an additional factor because there are fewer costs associated with real estate investment when utilizing asset-back digital tokens. Investors can avoid expensive legal and administrative fees. Not only does this improve speed and efficiency but it can also increase the return on investment.
Asset-backed vs. traditional real estate investment
Traditional real estate can be costly and inefficient, including multiple steps and different parties involved – all of which can result in a slow process. Blockchain-backed, digital real estate investment can reduce this process down to a single transaction, or click of the mouse, which executes a smart contract utilizing a digital currency, resulting in the buyer gaining a token. This saves time, saves money, and is designed to be a more positive experience for everyone involved.
Digital asset real estate investing is a democratic solution that not only lowers the barrier to entry for a broad spectrum of individuals from across society but also provides real, tangible assets with a rapidly scalable model that has the potential to build multi-billion businesses.
Challenges of digital assets for real estate ventures
As highlighted, digital assets hold many benefits and are now a real competitor to traditional methods for real estate investment. Implementing blockchain in the industry has some challenges, including regulatory hurdles and the need for standardization. As a burgeoning technology, a framework for regulation isn’t yet fully in place. There is still somewhat of a higher sense of uncertainty about how this will impact digital assets. Backers may be more concerned due to the precarious nature of their investment. Digital real estate assets are also at some risk of fraud, cybersecurity, and hacking threats, despite being far more secure than traditional methods thanks to blockchain technology.
With a verified digital platform such as DigiFunds, cumbersome and time-costly legal processes required for obtaining a bank loan are eliminated, and businesses can start raising funds on a much quicker time scale. DigiFunds operates a cutting-edge financial system that is fully compliant with all laws and policies. We take care of the legal processes so that businesses can focus on what really matters: fundraising.
To find out more about how asset-backed tokens can work with your real estate investments, head to the DigiFunds website.