Before we get into the discussion of the combination of blockchain and the real estate industry, here’s a quick grasp on blockchain technology by 2025:
A survey of the World Economic Forum of 800 executives and technical experts in 2015 found that 10% of all data on the world’s gross domestic product will be stored on blockchain technology by 2025 – that makes it to one-tenth of all financial data.
While blockchain is still in its infancy, it is clear that it can potentially influence the real estate sector as well for years to come. Blockchain technology has impacted the real estate industry in many ways including offering buyers and sellers new means of connecting with each other. In addition, blockchain technology in real estate results in an orderly transaction that eliminates intermediaries and their associated costs: broker fees, loan fees, closing costs, appraisals, audits, legal fees, etc.
If you are thinking about how blockchain can be used in real estate, then you should be one of the first things on the list to use it to simplify payments and increase the security of real estate transactions. Thus, blockchain allows for a platform for all parties to provide secure, transparent, and fast real-time communication, automation, tokenization, and access to information – all of which are highly valued in real estate – however, blockchain could enable trading platforms and online marketplaces to support real estate transactions more comprehensively.
For example, ATLANT has developed a platform that uses blockchain technology to facilitate real estate transactions and leases. By tokenizing real estate assets, assets can be traded the same way as stocks on the stock exchange, and transactions can be made online. The owner of one of their assets can choose to tokenize their assets and sell a percentage of their capital using the funds to acquire another asset. By exchanging ownership on the blockchain, the developer removes traditional time constraints associated with selling real estate.
Smart Contracts and Blockchain
The introduction of smart contracts on blockchain platforms now allows assets such as real estate to be tokenized and sold as cryptocurrencies like bitcoin and ether. Blockchains have gone far beyond the original use case for value transfer and can now be used to validate, secure, and automate significant amounts of a real estate transaction, with complete transparency and in complete compliance. Although cryptocurrency has yet to be implemented in traditional real estate, some companies are using blockchain technology to record rents.
A blockchain-based real estate system that uses smart contracts can facilitate the entire process, from signing leases to regulating cash flows and submitting service requests. In fact, using smart contracts on the blockchain, Mark Zilbert, executive vice president of Brown Harris Stevens Miami, says that real estate transactions can be as simple as shopping online. No company name or attorneys are required to contract or register real estate and distribute money. When the ownership changes ownership, a digital token (with a transaction record on the blockchain) changes its own ownership, giving a transparent history of land ownership. Its blockchain technology records every stage of a real estate transaction, from the expression of initial interests to signing contracts and the transfer of title.
Incorporated in a blockchain-based database to instill confidence in the authenticity of digital transactions, decentralized registration technology can be used to create effective solutions for both commercial and residential real estate, by collecting data from different stakeholders in a blockchain-based database, which can ultimately help buyers, sellers and owners gain insight into the market, analyze property values faster and help to speed up decision making.
The blockchain-based digital solution was developed by the Swedish Land Administration Lantmateriet in cooperation with the blockchain startup ChromaWay, the Swedish telecom giant Telia and several real estate agencies. Another example that is really worth using blockchain is the Swedish tax agency, which uses this technology as a solution for real estate transactions and explains how it works.
It is clear that blockchain could do wonders and bring significant value to the real estate industry. It increases accessibility, codifies the practice of real estate ownership, cuts down the intermediaries, and impacts the entire real estate in a more remarkable way connecting buyers and sellers with one another.