How does tokenization work in the real estate market?

Markets in all areas are constantly changing, sometimes it is difficult to keep up, but almost all of them are influenced by technology, which plays a huge role in society. A great example of a trend in the world of real estate is real estate tokenization .

Tokenization is the word used for the process of creating tokens, recently implemented in the real estate sector, aiming to protect sensitive information from being corrupted.

Nowadays, with technology taking up so much space and storing important and crucial information, great care must be taken when handling data.

Based on the General Data Protection Law (LGPD), several measures and software for this purpose were created, including tokens.

These are security features that act by modifying information in a portrait of encrypted data. They are created in real time, and in a random and unique way, which makes them similar to fingerprints.

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What is real estate tokenization?

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As already explained, tokenization is the process of creating tokens, but this resource has another purpose, that of creating digital contracts, which are legally protected and represent physical or digital assets.

After this process, the asset is converted into a document compatible with storage on the blockchain.

What is an asset?

Assets are present in different ways, when it comes to finance, they represent an asset, that is, goods with market value and generate or can generate income , when a token is created, the asset requires some steps.

First, the asset goes through a tokenizing company, which verifies its veracity, if all conditions are in agreement, a contract will be signed, and the token created, which will be stored on a platform indicated by the tokenizing company, where the smart contracts will also be created.

Once this is done, with the help of a blockchain, the information will be safe to be distributed, therefore, those who show interest in a good will be able to access its offers and will have the possibility of making a deal.

After any purchase or investment, the purchased part according to the contracts made will be passed on, and any details regarding the signed deal will be stored where the tokenization was carried out, thus ensuring its compliance.

What is the importance of tokenizing a good or product?

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In addition to the security of stored data, the main advantage of tokenizing a good or product is adding value to it.

Since a token is a digital and valid representation of a real asset, they can also represent money or some other type of asset, such as commodities, as long as their quantities do not vary.

This process will allow the transformation of an asset into guarantee certificates or they can even be converted into cryptocurrencies.

What differentiates negotiations carried out in the traditional way from tokenization is the practicality and security of the process. This technological advance has broken down the barriers of distance, validity of documentation and bureaucracy that a negotiation required.

This technology is revolutionizing the way we do business, contracts and storage, and tends to grow and migrate to other areas as well, from investments to the way in which products are purchased and sold.

Tokenization in the real estate market is already happening, and it is important to stay informed about all the news and trends in this world.

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