The Potential of Blockchain Technology in Real Estate
Interest in blockchain is driven by the growing awareness of what decentralized technologies are capable of. Blockchain is applicable in the field of real estate, with its complex and resource-intensive document flow for registering property. It is also a useful tool for verifying people’s identity.
Houses for rent, parking spaces, land plots – soon all these activities will be carried out on the blockchain, the interaction between buyers, sellers and investors is reaching a new level, where all the parties can see the transparency of the transactions they make.
Why should the real estate sector use blockchain technology?
The trust system inherent in blockchain makes it an ideal technology for the real estate industry. Companies around the world are starting to leverage smart contracts and blockchain capabilities to transparently and efficiently facilitate renting, buying, investing, and even lending.
The use of distributed ledger technology (DLT) allows owners to gain a more transparent and detailed view of the payment history and tenant data, significantly increases the credibility of contractual processes, and reduces the time and cost of their implementation. Moreover, a colossal number of real estate transactions are carried out around the world every day, andtherefore the need for a common database of rentals and purchases is growing significantly. The blockchain is capable of updating the traditional Multi-Listing System (MLS), a professional information system that brings together offers from market participants from different real estate agencies, and creates a much more transparent MLS in which brokers and agents can see the entire history of transactions in relation to property. For example, Georgia implemented blockchain technology on a state level and it provides citizens with a digital certificate of the assets. This is backed up by cryptographic proof, which is subsequently shared on the blockchain. The project’s major purpose was to equip citizens and governments with a flawless solution for maintaining data security, transparency, and auditable operations.
- Real estate investment becomes affordable
Blockchain technologies are removing barriers to investing in real estate, as well as providing stakeholders with exciting new opportunities, namely fractional or partial ownership. With the introduction of blockchain, property owners can offer shares of their property or tokens on the market, which allows investors to buy property not in its entirety, but only part of it.
- Tokenization increases liquidity
The introduction of smart contracts allows you to tokenize real estate assets and, most interestingly, provides an opportunity to trade them like cryptocurrencies. It is important to note that real estate has long been considered an illiquid asset due to the fact that it takes a very long time to complete a transaction. However, real estate is much easier to sell as tokens.
- Eliminates intermediaries and reduces costs
Buyers and sellers will benefit much more from the transactions, as they will greatly save on the commissions and fees charged by intermediaries and brokers. In addition to this, blockchain platforms also reduce the costs of checks, registration fees, loan fees, taxes, etc., since all processes become part of an automated system. In Estonia you can register your land without visiting the brokerage stores or government authorities. “E-Land” is a great blockchain-based application that allows you to access your land registration and real-estate ownership data history, it does not involve intermediaries, it is paperless, cost and time-efficient.
The implementation of blockchain in the real estate industry is still at an early stage: there are still too many issues related to the standardization of processes, legislative regulation, and rules of use.
The market has not yet fully appreciated the opportunities that blockchain technologies are beginning to generate at a global level, however, the first steps have already been taken: companies began to look to the future in a new way, they had the opportunity to study the potential of blockchain in order to activate growth and creation of a system that is more transparent than ever.
Interested in bringing your real estate company to a new level? Block.co is here to help. We issue digital certificates and non-fungible tokens that ensure your ownership of land, property and real estate. By using our solutions, you can be sure that your transactions and procedures will be transparent, secure, and equitable.
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