Between Web 2.0 and Web 3.0, the internet has made leaps and bounds by shifting from single-user experiences to one-to-many experiences on platforms that allow anyone with an internet connection to upload and engage in content anywhere and at any time. “Decentralization” and “democratization” are the terms that have been used mostly to capture the sentiment of the sharing economy: “the peer-to-peer activity of acquiring, providing, or sharing access to goods and services often facilitated by an online platform”. The average citizen will be able to take their power back from the traditionally rich, authoritative, and powerful.
Driven by both cultural shifts in our modern economy and advancements in digital technology, decentralization has become more than a cool idea popularized by Silicon Valley tycoons and philosophers—it’s a movement. Decentralization is the distribution of power away from large authoritative bodies. It effectively creates democratization, shifting the power from central bodies of power to individuals.
Since the traumatizing financial collapse of 2008, many average citizens and investors have been scarred by the negligence of institutions that set off a chain reaction of demise. People had become more distrusting than they already were of financial institutions, the government, and the elite class, causing a seismic shift in public attitudes. Bitcoin, a decentralized currency, emerged in 2009, began trading in 2010 for $0.09, and was valued at “an all-time high price of $67,549.14 on Nov. 7, 2021.”
Cryptocurrencies operate in a system where banks and federal institutions are not involved. Cryptocurrencies do not require an institution to transfer funds, allowing for faster and easier transactions, some of which can be completed in a matter of seconds. There has never been an easier way to transfer funds between two parties.
Cryptocurrency has given many people new opportunities to trade and invest, diversifying their portfolios and holding the value of their investments in a decentralized currency. Crypto real estate investing has democratized property ownership, reducing the presence of middlemen and eliminating bureaucracy. Blockchain functions as an immutable ledger that can store records that traditional databases do not have.
Generally speaking, anyone can be an investor, but not everyone can invest in assets such as real estate. Real estate traditionally has a high barrier to entry, requiring a large sum of capital as an upfront down payment, which most people do not have access to or struggle to save for.
While homeownership may be a lofty financial goal for the average American in the traditional sense, fractional ownership creates democratization in real estate. A single property can be divided into fractions, which can be purchased on platforms like Real T for as little as fifty dollars per token. Tokenization and cryptocurrencies reduce the risks, obligations, bureaucracy, delays, and informational asymmetry that riddle traditional real estate transactions.
Fractional ownership is making real estate investing more accessible. This is especially important now, as buying a first home has proven itself to be a challenging financial goal for many young adults and millennials who live in an era when the housing market is at a far higher valuation than the time at which their parents bought their first home.