There’s a lot of hype about turning property into digital tokens and trading it on a blockchain—but so far no one is actually doing it. That’s going to change this year, says “PayPal Mafia” member David Sacks, and the first thing we’ll trade are real estate tokens.
Sacks is worth heeding. He’s best known as the first COO of PayPal—where he built a payment giant alongside other mafia members like Elon Musk and Peter Thiel—but is also a serial entrepreneur who recently launched a $350 million venture fund focused on crypto.
On Thursday, speaking at Token Summit in New York, Sacks explained why he is bullish on “security tokens,” which are the blockchain’s version of traditional securities like shares or derivatives (my colleague Polina Marinova has a nice explainer here). According to Sacks, the advantage of tokens is they reduce or eliminate the “illiquidity discount” for assets that can’t be publicly traded.
This discount means people pay less because they’re worried an asset will be hard to resell. Sacks cited the professionally managed real estate market, which is worth $7 trillion but is not very liquid.
He thinks it’s possible to unlock a huge amount of value by letting people buy and sell chunks of real estate with tokens—each token would correspond to ownership in a piece of property, and could be easily swapped on a blockchain. Sacks believes this newfound liquidity will attract more capital to real estate, and also create a derivatives market for property. Read more from fortune.com…
thumbnail courtesy of fortune.com