Tokenization, the process of converting assets into digital tokens on a blockchain, holds the potential to unlock trillions of dollars in global real estate assets by fundamentally changing the way investors invest. And while some observers warn of tokenization as an industry disrupter, others caution that those who are not prepared for the new “token economy” risk being left behind. These and other trends were discussed July 8 at a virtual panel of financial and legal experts hosted by the Fordham Real Estate Institute.
More than 300 professionals registered for “Get Ready: Tokenization, Blockchain, and Crypto Currency Is Coming to Real Estate,” which focused on best practices for using emerging technologies.
The panel featured Donna Redel, an angel investor and blockchain digital assets professor at Fordham Law, and David Otto, attorney, cofounder and managing partner of Marin Davis PLLC. The discussion was moderated by Daniel Mee, president of Dillon Capital Advisors LLC.
Mee asked the panel to explain how tokenization could benefit limited partnerships and limited liability companies, in terms of investments. “Liquidity seems to be the big benefit here,” said Mee. “Can’t we just get liquidity by allowing the limited partners or members of LLCs to sell their rights freely? Why do we need blockchain? Why do we need tokenization?”
“It’s a higher, more secure, more fluid and more transparent mechanism for the distribution and transfer of interests and the recording of those transfers,” said Otto. “So, there’s immediate transparency, there’s immediate transfer and there’s a considerable amount of cost-savings on the administrative side. The ability to transact immediately, at a low cost, with transparency and to be cryptographically secure is meaningful.”
The panel also noted that certain larger players – particularly banks – have not stepped up to the plate and are missing an opportunity in the token economy.
Mee also noted issues of cybersecurity, citing recent attacks on certain U.S. sectors, including energy and food processing and questioned whether there are similar concerns for the token economy.
“This whole area is one big startup, and there are many, many startups within it,” said Redel. “You have to be reasonable – you can be excited about the technology, excited about the individual company, but you have to apply the same due diligence that you do to anything else, with any other investment or any other new technology.”
The Fordham Real Estate Institute currently offers degrees and certificates in real estate and construction at its campuses in Manhattan and West Harrison, New York.