Real Estate Blockchain Apps: Benefits
and Use Cases

The coming year will be an inflection point for blockchain usage in real estate. Private investment has been flowing in real estate technology, cryptocurrency wealth is massive, real estate professionals are being increasingly aware of blockchain and the underlying technology is improving. Similar to using the internet, blockchain usage may soon be so common that you forget you’re even using it.

In the context of the real estate industry, there are several possible uses for the block chain along the entire property value chain.

Transfer of Purchase Price: Tokenization

Traditionally, only the wealthy could afford hard assets such as real estate and wait years to liquidate it. That changes with tokenization.

Tokenization democratizes ownership of assets by using cryptocurrency to split assets into tokens that are stored on the blockchain. Someone who wants to invest in a trophy real estate project now can resell their share on the open market through secondary trading. Also, people in different geographies and tax brackets can buy property that was erstwhile inaccessible. Landlords now have the ability to sell off just a portion of their property to the crowd. In 2019, I believe we will see a major migration of real estate ownership moving to the blockchain.

Traditional Contracts turned into Smart Contracts

Through the use of a single decentralized application that uses blockchain-backed smart contracts, the entire property management process, from signing lease agreements to managing cash flow to filing maintenance requests, can be conducted in a secure and transparent manner.

In residential real estate, for example, a landlord and tenant could digitally sign a smart contract agreement that includes information such as rental value, payment frequency and details of both the tenant and property.

Based on the agreed upon terms, the smart contract could automatically initiate lease payments from the tenant to the landlord, as well as to any contractors that perform periodic maintenance. Upon termination of the lease, the smart contract could also be set to automatically send payment of the security deposit back to the tenant.

This allows traditional contracts, such as mortgage agreements and tenancy contracts, to be brought onto a blockchain to establish a history of agreements and financial transactions that can be traced and audited.

Benefits of Smart Contracts

Asset Traceability

Tracking goods and parts along the supply chain and throughout their life cycle to improve decision making about inventory management and repairs.

Finance

Accelerating settlement times and minimizing disputes and reconciliations through automated, real-time, three-way matching and billing and seamless cross-border payments.

Tax and Customs

Automating and streamlining compliance burdens by executing transactions precisely and reliably while automatically generating documentation.

Payments, royalties and licensing

Automating predetermined contract terms and enabling faster royalty payments and subscription revenue settlements, while increasing trust in customer data.

Identity management

Authenticating identity on a blockchain for credential, identity and loyalty& rewards program management.

Digital currencies

Facilitating financial transactions with a decentralized currency that crosses borders and eliminates intermediaries.

Records and Contract management

Ensuring that contracts are executed according to listed conditions and enabling consumers to share records across multiple entities, while safeguarding data privacy.

Audit and Compliance

Enabling real-time transaction level assurance and providing additional transparency to stakeholders.

Data exchange is just now being tested in live environments.

There are several projects promising tokenization and transaction services. However, in order to reach that potential, there are certain steps that need to happen and the first is connecting the physical real estate world to the digital world.

Blockchain apps gives us the ability to do it in a safe, accurate and secure way. Blockchain’s impact will be an unparalleled paradigm shift for the real estate industry going forward.