“Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly."
Advocates like Buterin will say decentralization of the financial system is better for everyone and real estate DeFi use cases get cited often as ways could improve the status quo. Boiled down, blockchain and the ability to tokenize real estate ownership interests have the potential to create two significant advances: lowering the friction of deal execution, and creating entirely new ways to invest. However, neither is playing out at scale - there are no institutional blockchain real estate markets. And with a few years of history to review, there are reasons to think some of these advances will not fully mature for a long time, if ever. A new research paper helps explain why.1
First, tokenized ownership creates the potential for reduced transactions costs. Countries like Georgia and Sweden have adopted blockchain-based land registries, making transfers and financings easier through digital, immutable records. Collectively those efficiencies could be meaningful, but since real estate trades infrequently and even at scale, tokenization would not reduce overall transaction costs or complexity meaningfully, this does not feel like the use case to lead with in the pitchbook.
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