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Perspective by: Venket Naga, co-founder and CEO of Serenity
The interactions between cryptocurrencies and the real estate sector have changed significantly over the past several years. Acquiring properties through crypto-supported loans has transitioned from revolutionary news to the norm.
An increasing overlap exists between crypto and tangible assets (RWAs), presenting numerous opportunities.
Whether it’s Dubai’s inaugural tokenized real estate initiative in MENA, the globe’s largest $3-billion RWA tokenization transaction, or initial investments, these tokenization endeavors are too prominent to overlook the direction of this field.
This direction is poised for additional expansion, with the projection that $4 trillion of the real estate sector will be tokenized by 2035. As real estate tokenization advances at remarkable velocities, the market is evolving to a democratized framework accessible to all investors, irrespective of their capital size.
A subtle, unresolved inquiry could significantly impede this path: Who inherits these assets upon the owner’s demise?
As a cornerstone of conventional property legislation, inheritance could become a failure point for real-world assets if its principles are not adapted to blockchain technology.
Potential remedies for the inheritance issue
The lack of a universal, legally acknowledged succession framework is becoming a risk factor that is escalating as swiftly as blockchain-based ownership in real estate.
While considerable focus has been directed toward regulatory adherence, with frameworks like the Markets in Crypto-Assets (MiCA) Regulation emerging, inheritance—one of the key pillars of property rights—remains oddly absent from the regulatory discourse.
Admittedly, the conventional court-recognized inheritance system may not fit the tokenized real estate landscape, but without a digitized alternative, heirs find themselves contending with opaque custodianship, unclear jurisdictional claims, or the permanent loss of valuable assets.
As an afterthought, inheritance questions might be resolved with cold keys, as this is regarded as one of the most recommended methods to store private keys. While this approach may offer some utility, it does not adequately address worst-case situations.
If the key is misplaced, so is the inheritance. Other alternatives, like multisigs or custodial trust setups, could be explored, but a fundamental gap persists where a native, secure, and automated inheritance layer must exist.
Related: Dubai authority clarifies real-world asset tokenization regulations: Attorney
Currently, inheritance in Web3 is either precarious or manual, undermining the tenets of decentralization and automation.
The solution to the inheritance dilemma in blockchain technology can be identified within the technology itself and its intersection with the real world. This involves innovatively examining elements in current advancements to create something novel. This ideal balance of familiarity and innovation could lead to what might be termed a decentralized data survivability protocol (DeDasP).
This protocol could outline inheritance conditions via smart contract capabilities, facilitating an automated key transfer to assets upon satisfying those conditions.
One method for this transfer could be splitting keys into NFTs among heirs, employing the logic of a multisig threshold for decryption. This would form an automated inheritance framework with clarity established between the owner and successors.
“Not your keys, not your inheritance,” some may express valid concerns regarding the potential loss of successors’ keys, thereby restricting access to the theorized NFT shards of inheritance. This is precisely where the real-world integration comes in, provided that access to wallets is secured through biometric verification.
Strategically merging technologies such as sharding, NFTs, biometric authentication, and smart contract execution to automate survivability could be a pivotal moment for blockchain’s capability to manage generational wealth transfers at scale. This lays a foundation for defining digital property rights and presents the natural progression in the evolution of tokenized real estate: bequeathing tokenized assets to the following generation.
Looking ahead
No one should lose their tokenized property due to poor planning, legal ambiguities, or forgotten credentials. Instead, it should be securely preserved for wealth transfer across generations.
Equally robust strategies for asset succession must progress alongside the advancement of real estate tokenization. In their absence, the promise of democratized access and seamless ownership may disintegrate, ensnared by the very issues that blockchain aims to eliminate.
The silver lining is that emerging technologies are paving the way for a superior approach, wherein ownership transcends individual bounds and persists through integrated, trust-free inheritance mechanisms that resonate with Web3’s core principles of permanence and autonomy.
Perspective by: Venket Naga, co-founder and CEO of Serenity.
This article is intended for general informational purposes and should not be misconstrued as legal or investment counsel. The views, ideas, and opinions expressed herein are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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