Let’s begin with the basics and definition of ‘Blockchain’.Well, blockchain is a digital ledger that is used to record transactions that are secure, verifiable, and without data-tampering. Blockchain has a long history and has existed for decades. However, it became a topic of discussion less than a decade ago as Satoshi Nakamoto introduced Bitcoin that uses the mechanism of the blockchain. A digital currency of a new digital world that eases both digital and non-digital transactions as once the transaction is processed and saved amongst one of the chain blocks making the data secured and untampered.
Blockchain has transformed many facets of multiple industries. The changes brought about in cryptocurrencies, and the impact on current situation showcases the advantages of the blockchain. Along with advantages come disadvantages and blockchain can be disruptive to some professions like real estate. Let’s look at how blockchain can change the real estate industry.
No need for a middleman
Middleman has always played a role in the real estate industry. Also referred to as ‘brokers’ who would take a fair share from both the consent parties for their services. With the entry of blockchain technology, the concept of a broker or ‘middleman’ would be excluded altogether. Buying and selling of properties would be based on peer-to-peer agreements and making payments and receiving money would be through cryptocurrencies, such as Bitcoin or Ethereum. The transaction would be less costly without paying an extra cost for finalizing deals.
Reducing the risk of fraud
Traditionally, both the buyer and seller were required to have a trustworthy person or company as a guarantee stating both the parties would keep their word till the end of the contract. With the help of Blockchain technology, the concept of escrow would be uprooted. There have also been many cases of forgery, and innocent people have lost millions of hard earned money. Third-party verification is preferred by many but at a very costly price. On the contrary, Blockchain technologies are much cheaper and vouch for identification of each party involved from the distributed database. All transactions are recorded and protected with cryptography making it impossible to hack and minimizing the risk of fraud.
Transaction made easy
Many industries are taking advantage of blockchain technology, and the real estate industry can also benefit from the services offered. Buying, selling, or renting properties involve government entities, and the procedures of legal requirements can be lengthy and not a pleasant experience. Using blockchain services procedures can be fast-forwarded as involved parties can access an immutable digital ledger that shows all transactions. Although one would have to go through government procedures Blockchain can serve as an essential tool in quickening the verification process that consumes most of your precious time.
Smart contracts would help maintain transparency
Most people buying properties avail the benefits of personal loan or some form or mortgage process. It can be quite a harrowing and tedious experience. With the help of smart contracts that are based on blockchain technology assets transferred could follow specific instructions. Property transactions can be added in a similar manner and payments between parties can be dealt with using digital currencies like Bitcoin. The advantages of a smart contract are they will beautonomous and self-sufficient. In short, they would self-execute details precisely as the source code and pre-agreed contract dictates without any human involvement and would be stored permanently on Blockchain.
Smooth rental transactions
Several companies are now using blockchain to offer stable and fast rental deals and prefer to give decentralised platforms to their clients. Smart contracts have replaced traditional paper agreements we can now have a tokenized utility that will record each transaction in the Blockchain database that will be irreversible. Owners can use blockchain technology for auction services as well in order to screen tenants.
Dominated by the rich and large corporation’s real estate globally is worth $217 trillion. The transformation would not be an accessible path and cannot be achieved overnight. There are still many routes to be discovered, and forward-thinking real estate firms would have to take the initiative to deliver the changes and convince masses that blockchain is the future and the correct path to stay relevant in the trading world. With the help of blockchain, more people would be able to utilize the market and make transactions that are transparent, secured, and equivalent to all. We might see a complete transformation of real estate making it peer-to-peer activity-based range and most of work being done by blockchain-powered platforms.