In our previous articles Blockchain in Healthcare and Blockchain in Education, we explained the concept of Blockchain and its pros in this particular domain. You can go through these articles to have a refresher on what Blockchain actually is and its key features. Here let us talk about how the Blockchain is transforming the real estate sector.
Nowadays there is a lot being written and discussed Blockchain, its applications, bitcoin and related technologies, and for many real estate professionals and business, this is part of a brave, vivid, new, confusing world of technology. Just like the original internet, the Blockchain is a promising revolution in technology that will touch all people and every business.
To understand how Blockchain can benefit the real estate business, we need to first understand one prime application of Blockchain which is Bitcoin.
Bitcoin, an application of Blockchain technology, is a medium to transfer cash. Just like in a barter system people use to exchange goods for good. Bitcoin similarly plays a medium of transfer of cash. To understand how it works, consider this example. You buy bitcoins with real cash or money. Then you transfer ownership of the bitcoin you bought to someone else, to whom you want to transfer the money, with the consensus of thousands of “witnesses”. That someone else can then sell the bitcoin to obtain back the cash. It is a fraud-proof and digital way of transferring funds without the involvement of any third party or bank. Thus it saves processing overheads.
Considering all these problems, Blockchain is an overall solution for each of these. Let us tackle each one by one and understand how Blockchain will transform the real estate sector.
With the help of Blockchain technology, people in a real estate sector are developing smart contracts, which will enable real estate contracts, property records (deeds, for example), construction phases to be completed and monies distributed without the involvement of title companies or attorneys. In the coming future, there is a high possibility for a homebuyer to buy a home or a flat and complete the sale (along with the tedious process of escrow and title insurance) just by clicking on a shopping cart on a website completely digital. The implementation of Blockchain technology here will ensure that the buyer gets the home title or deed and the seller gets the complete cash (via a cryptocurrency). The record keeping system that Blockchain offers, will also record the title or deed to the appropriate public records. This will ensure the authenticity and accuracy of records saving the prime issue of keeping a track of ownership of lands which is the main cause of a majority of riots in the real estate world.
It is important to keep a note of how Blockchain uses could potentially revolutionize rental property payments. Cost-efficiency, transaction authenticity and better decision-making in leasing transactions can be achieved with a shared database that Blockchain can provide. Also, this shared database will be a whole vertical of stakeholders including owners, tenants and service providers can interact with ownership information, or transaction history in an open, secure way.
Example:
In the years to come, it may be possible for a customer willing to buy a home to complete the sale (along with escrow, registration process and title insurance) by just a digital click on a shopping cart on a website. The complete implementation of Blockchain technology in Real Estate market will ensure that the buyer gets the title or deed he is paying his hard earned money for and the seller gets the money(via a cryptocurrency). The Blockchain technology’s shared database will also record the title or property transaction to the appropriate public records, such as a county in the United States or similar system in other countries.
Real estate professionals and mediators will continue to thrive in the upcoming era of the Blockchain technology. The advice, knowledge, experience and hand-holding of real estate professionals will always continue to be an important part of a buyer or seller’s process. Despite this, the handling of money and transactions in the real estate world will inevitably change. To anyone who understands and is updated with the latest things, can easily see that the change we are talking about is already underway. Brokerages will need to adapt their business models to understand, process and enable smart transactions but otherwise will continue to thrive in this continuously growing world of Blockchain Technology.
Blockchain may bring many features, security and other perks with it, but it will surely be a challenge for the mediocre and dealer to cope up with the new and dynamically changing module. But one thing that Blockchain technology can ensure is, it will rule out the corruption, improper and unjust transactions involved in the field this technology is applied. So its application in the real estate world will ensure the same in this field.
In this article, we have covered many perks and cons of an introduction of Blockchain Technology in the real estate sector. But we also need to understand that what makes the Blockchain Technology universal and applicable everywhere is how it can be implemented for just about any kind of transaction, record-keeping or agreement between one, two or more parties. These can include
Smart contracts for every transaction.
Supply chain management.
Intellectual rights, patents, ownership and trademarks.
Property rights.
Criminals records.
Medical records and history.
Personal records and credit history.
As long as there is information or transaction that represents an agreement or record, the Blockchain technology can record, encrypt, sustain and protect that information for eternity.
