Turning bricks into code: How cryptocurrency reshapes real estate market
XRP investors rethink how to buy real estate
βA new trend is emerging in the crypto space: buying real estate without mortgages, bank checks, or even selling your digital assets. XRP investors are among the first to test this model in practice. The idea sounds simple β instead of selling tokens, theyβre used as collateral to unlock liquidity. But how simple is it really?
A bank-free scenario: how it works
It all starts with a crypto-backed loan. Imagine an investor holds $10 million worth of XRP. Rather than converting it into fiat β and losing potential upside β they go to a decentralized platform and borrow, say, $2 million, using their staked XRP as collateral. That money is then used to purchase a home. Traditional lenders arenβt part of the process.
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This approach allows the investor to retain full ownership of their crypto while avoiding capital gains taxes that would arise from selling. With no bank involved, thereβs also no need to endure lengthy approval processes, income checks, or credit score reviews.
The next step: tokenizing real estate
After purchasing a home or apartment, some investors are taking it even further by integrating the property into a blockchain ecosystem through tokenization. In this model, the equity β not the deed β is converted into digital tokens. These tokens can be stored, partially sold, or even used in DeFi protocols to earn yield. Projects like Lofty and PRYPCO already facilitate real estate tokenization on blockchains such as Algorand and XRP, respectively.
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In theory, this allows property owners to generate additional income. As the value of the home appreciates, the tokenized equity can work in parallel β earning yield within DeFi. The asset transforms from bricks and mortar into a living component of a decentralized financial system.
But is it really that seamless?
Skeptics raise valid concerns about the viability of this model. In practice, it introduces a range of legal and financial complexities. For instance, if the property is mortgaged, using it as collateral in a DeFi platform could distort the loan-to-value (LTV) ratio β a key metric that influences mortgage interest rates. If the borrower defaults, who has first claim on the asset: the bank or the DeFi protocol?
Security is another issue. If tokens representing the homeβs equity are hacked or stolen, selling the property becomes problematic. Legally, the owner still holds the title, but the tokenized rights may be in someone elseβs hands β especially if those tokens are circulating in open liquidity pools. Recovering control could be extremely difficult.
On top of that, the legal framework for tokenized real estate is still in its early stages. Many platforms claim to be fully regulated, but such assertions should be scrutinized carefully. At this point, the concept is less a mature financial tool and more an evolving experiment β one that carries significant regulatory and technical uncertainty.
Breakthrough or experiment?
At the intersection of crypto and real estate, a new model is emerging β bold, risky, but full of potential. Itβs certainly not for everyone: there are no guarantees, no insurance, and no standard regulations. Still, it opens new doors for those who want to preserve their capital in digital form while gaining access to physical assets and liquidity.
If the traditional system relies on banks and paper contracts, this model challenges the status quo. And while it may still look like a financial experiment, the idea of turning bricks into code has the power to reshape the rules of the game.
