We can agree that blockchain technology has been a disruptor in several industries, its most significant impact in the financial sector. Blockchain technology has virtually changed how industries and the world economy work. It is difficult to find a sector that has not been influenced by blockchain technology across the board.
Cryptocurrencies have had an impact on the way payments and remittances are made. Initial coin offerings (ICOs) have changed the way stock markets and stock investing works. It has impacted venture capital, and startup loans and supply chains have also been completely changed, all thanks to blockchain technology.
The real estate industry has also been positively impacted by blockchain technology, leading to a disruption in the sector. Smart contracts have benefited the real estate sector immensely. Transactions in the real estate sector through digital channels have rarely been carried out. Instead, transactions are carried out face-to-face between the parties involved. Smart contracts have changed that by allowing real estate assets to be tokenized and traded like cryptocurrencies.
Blockchain technology has already changed the real estate space.
- Blockchain technology enables trading platforms and online marketplaces to support real estate transactions better. It also introduces new ways in which individuals can trade in real estate.
- Blockchain technology eliminates intermediaries like lawyers, brokers, and financial institutions that have been part of the real estate space. Blockchain platforms can assume functions like payments, legal documentation, and listings.
- Blockchain technology allows fractional ownership, lowering the barriers to investing in real estate. Before blockchain technology, real estate investments require a considerable amount of capital upfront to acquire a property. It enables property buyers to tokenize and sell their properties fractionally.
- Blockchain technology brings liquidity to the real estate industry. Real estate has long been considered an asset with less liquidity.
- Blockchain means decentralization. Blockchain technology is a decentralized technology; All information stored on the blockchain is accessible to all. Because all information stored on the blockchain is verifiable, it gives buyers and sellers more confidence to conduct transactions because decentralization would root out fraud.
What influence has blockchain technology had on real estate?
It is clear that blockchain technology has had a positive influence on the real estate industry. So it is not surprising that the industry is looking to blockchain technology again after the devastating impact of the COVID-19 pandemic. The disruption that the COVID-19 pandemic has caused in the world economy is immense. However, with every crisis, there is an opportunity for change, and we see that when it comes to blockchain technology and real estate. The COVID-19 pandemic could act as a trigger for blockchain technology in real estate to enter mainstream markets.
We already see a growth in the adoption of blockchain-based real estate. COVID-19 has exposed flaws such as privacy concerns of individuals, which can be solved through blockchain transactions; blockchain transactions are also a safer means of transaction in the face of growing cybersecurity issues. Smart contracts ensure that transactions are secured. They also eliminate the need for intermediaries. An uptick in the housing market is also contributing to the increase in adoption.
Blockchain technology is also driving up investments in the real estate sector due to the rise in blockchain adoption in real estate. Smaller firms are now appearing in the real estate space, thanks to blockchain.
How does blockchain technology improve the real estate industry?
Blockchain technology solves several issues that the real estate industry faces. The COVID-19 pandemic has quickened the adoption of blockchain technology in the real estate space. Some of the use cases in which blockchain technology can play an important role.
- Blockchain technology can help the real estate industry to have a secure and robust land registration system. This can be achieved by storing all records digitally on the blockchain. Storing the records digitally ensures that the records are safe from being lost or destroyed as they are held in multiple locations. Blockchain technology also makes records less susceptible to fraud or being manipulated. Records once stored on the blockchain are impossible to edit or delete, making all records stored digitally tamper-proof.
- Another prominent issue that the real estate industry faces is that of multiple stakeholders having identical records. However, the stakeholders do not keep the information updated in real-time. This leads to fragmented and inaccurate information that affects transactions as the parties have to go through the same process multiple times. Fragmented and incorrect information can also lead to fraud. How does blockchain technology provide a solution? The blockchain is a public ledger that holds the data and keeps it accessible to all. It also keeps all information updated in real-time, meaning all parties involved now have access to the same information across all platforms. All changes made to the data are updated immediately and are sent to other stakeholders automatically. It also reduces the risk of fraud and streamlines processing times since the information is no longer fragmented or inaccurate.
- Blockchain technology has also enabled the use of smart contracts. The implementation of smart contracts has enabled the automation of complex procedures, making processes more streamlined. Smart contracts can also be used as rental agreements, with the rental terms and deposits predetermined and stored on the blockchain. The rental amount is then automatically deducted from the tenant’s account.
Conclusion
Blockchain technology can significantly improve the real estate industry, and its adoption will benefit the industry significantly. Blockchain technology can solve many issues that plague the real estate industry. The COVID-19 pandemic can trigger the quicker adoption of the technology and create an environment where the industry can thrive.
If the real estate industry’s adoption of blockchain technology continues at its current pace, we could see a radical increase in blockchain-based property sales. Even though the ongoing pandemic does lend an air of uncertainty to events, there are enough indicators to suggest that the real estate industry is embracing blockchain technology.
