There is so much hype about turning property into digital tokens and trading it on the blockchain—and yet no one is actually doing it so far. But, this is going to change this year, according to “PayPal Mafia” David Sacks, and the first thing we’ll be trading will be real estate tokens.
Sacks is known as the first PayPal COO, but he is also a serial entrepreneur who recently launched a crypto-focused venture fund worth $350 million.
Speaking at Token Summit in New York on Thursday, Sacks explained his bullish stance on “security tokens”.
According to him, tokens are advantageous in the sense that they reduce or eliminate the “illiquidity discount” for assets that can’t be traded publicly. This discount means people pay less due to fears that an asset will be difficult to resell.
The $7 billion professionally managed real-estate market, according to Sacks, is not very liquid. However, he believes it is possible to unlock a huge amount of value by allowing people to buy and sell portions of real estate using tokens –each token would translate to ownership in a piece of property and could be easily traded on a blockchain.
The former COO believes this new liquidity will draw in more capital to real estate, and even produce a derivatives market for property.
“It will lead to a world where you can short real estate. You can go long Manhattan and short San Francisco,” he said.
Additionally, Sacks predicts real estate tokens are not an impossible technology, and that by the end of the year, investors will be trading them.