This post originally appeared on Burt M. Polson’s Real Estate Journal and is republished with permission. Find out how to syndicate your content with theBrokerList.



A token represents something of value, a quality, or even a feeling. In the past, the paper dollar represented its face value in gold. A digital token on the blockchain could represent the securitization of real estate.

A Security Token

The securitization of real estate is not new. We have been taking real estate, an illiquid asset, and packaging a property or several properties into a tradable token. Tokens could be through the traditional ownership of units of a private equity fund like Napa Valley Fund One of or shares of a real estate investment trust (REIT).

Creating a digital security token is done when a property owner, developer, or sponsor of an offering tokenizes the opportunity on the Ethereum blockchain via a smart contract. For example, suppose the sponsor plans to acquire a 100,000 square foot commercial shopping center for $50 million. In that case, they could have one token, equal to one share, equal to one square foot selling each token for $500.

The initial sale of tokens is called a security token offering (STO) and is listed on a cryptocurrency exchange or sold through a FINRA (Financial Industry Regulatory Authority) listed institution.

Tokenizing real estate investments still need to be registered as an exempt security. Still, new regulations open the door to nonaccredited investors as well as investors globally. It also creates what has been in the past an illiquid asset into an easily tradable one.

The Non-Fungible Token (NFT)

Mainstream media news is exploding in digital NFTs with the sale of a digital work of art selling for $69 million. The buyer essentially purchased the digital token on the Ethereum blockchain, representing the jpeg of the digital art. The only right the buyer has is to view and sell the art. Like physical art, they do not own the copyright, but now using NFTs own an easily exchangeable form of art.

Something represented as being “fungible” or “non-fungible” comes from the realm of law. A fungible asset is interchangeable with another same but separate asset. Commodities, stock, or dollars are good examples. Examples of non-fungible assets are art, diamonds, collector cars, and real estate–no two are alike.

NFTs are trendy and highly speculative. You can purchase a short video clip of your favorite NBA player making a good shot, a famous tweet, or the latest meme as an NFT. I project, we will see NFTs finding a prominent position in real estate.

In holding and transferring real estate, we use a centuries-old system of a purchase agreement contract and, with the help of a title company or attorney, a recorded deed. NFTs are paving the way for a specific property to have its own unique digital token, or identity, on the Ethereum blockchain. By creating a smart contract, the transfer of ownership of a property can occur in seconds.

The distributed blockchain ledger creates an archive of all transparent transactions. With the blockchain ledger public and secure, no one entity controls the ledger, with the transactions quickly confirmed. The owner possesses the only private key for control and immutability.

Digital assets, cryptocurrencies, and blockchain technologies are expanding rapidly with new coin use cases and tokens created daily. I find the industry is changing so quickly that new technology is about to emerge as we learn how to use the current technology.

Burt M. Polson is the CEO of, a commercial real estate brokerage company, and CEO of, a private equity real estate fund. Call him at (707) 254-8000 or email [email protected] and [email protected]