Digital Democracy: how to own a house through tokenization

Addressing the question of how 1000 different people can own a house represents a unique challenge in the real estate sector. But how to manage the property, ensure adequate control of the asset, and define the power of each owner?

To tackle these challenges, the solution is not the direct tokenization of the asset. Instead, a more sophisticated approach is adopted, where the house is held through a Limited Liability Company (LLC), a corporation, or a Decentralized Autonomous Organization (DAO). Ownership of this entity is represented by tokens, offering an innovative and decentralized solution to the dilemma of shared ownership.

When an individual purchases a tokenized asset, they are not directly acquiring the house but rather an ownership stake in the company or organization that holds the asset. This entity should be established in a nation that has adopted clear and defined legislation regarding the crypto universe. In Europe, efforts have been made since September 2020 through MiCA, a regulation aimed at regulating crypto activities and protecting investors. Before that, those developing a web3 project aimed at tokenization could only refer to certain countries, such as Switzerland, Liechtenstein, or Malta for residents in Europe, or Delaware, Wyoming, or the Bahamas for residents in the United States. Like legal shareholders, token holders enjoy the same financial and legal rights that characterize shareholders of any other company. These rights include participation in profit distributions, protection from fraud, and some voting rights, ensuring significant involvement in asset management.

This strategy offers an innovative and secure way to invest in real estate, addressing concerns related to theft, scams, and fraud in an often vulnerable sector. Tokenization based on companies or DAOs promotes digital democracy, allowing diverse individuals to participate and benefit from real estate investments in a transparent and secure manner. In this new paradigm, blockchain technology proves to be a catalyst for the democratization of access to real estate ownership.