How Is The Blockchain Technology Revolutionizing Real Estate?
Learn how real estate is being influenced by blockchain. There are a lot of factors. Here are a few of them.
A Write-Up On The Influence Of Blockchain Technology
As it comes, the blockchain’s disruption of financial services as well as the subsequent widespread application across industries, it is hard to find a segment that has not been influenced by the technology. Here cryptocurrencies have made a strong impact on payments, remittances, and foreign exchange as the initial coin offerings have challenged stock investing startup loans, and venture capital. It is here that even the food supply chain industry has been upended by blockchain
Therefore real estate hasn’t escaped blockchain disruption either. It was then previously transacting high-value assets such as real estate exclusively through digital channels that have never been the norm. Therefore real estate transactions are often conducted offline involving face-to-face engagements with various entities as the blockchain however opened up ways to change this. The fact is that thereby the introduction of what is called smart contracts in the blockchain platforms now allowing assets like the real estate to be tokenized and be traded like cryptocurrencies like Bitcoin and ether.
Whereas the trading real estate this way varies, here are the six ways blockchain has changed the real estate game.
1. Platforms and Marketplaces
The fact is that real estate technology has traditionally been primarily concerned with listings and with connecting buyers and sellers which is however blockchain introducing new ways to trade the real estate and can enable those trading platforms and the online marketplaces to support all real estate transactions more comprehensively. Therefore as an example, ATLANT has developed a platform that uses blockchain technology to facilitate real estate and rental property transactions, thereby tokenizing real property, assets can be then treaded much like stocks on an exchange and transactions can be done online.
Subsequently it is said that this is how ATLANT now allows sellers to tokenize these assets which are essentially handling it like the stock sale and liquidating that asset through a token sale using the platform. It is here that the collected tokens can be exchanged for fiat currency with buyers owning a percentage stake of the property.
2. No Intermediaries
It is interesting that hereby the brokers, lawyers, and those banks have long been a part of the real estate ecosystem and however the blockchain may soon usher in a new shift in their roles and participation in real estate transactions according to a report by Deloitte as new platforms can eventually assume functions such as listings, payments, and legal documentation. It is here that cutting out the intermediaries will result in buyers and sellers getting more out of their money as they have on commissions and fees charged by these intermediaries. Hereby it also makes the process much quicker as the back-and-forth between these middlemen gets cut.
Later on it was found that while real estate has long been considered to be an illiquid asset it has since taken time for sales to conclude, this isn’t the case with cryptocurrencies and tokens since they can, in theory, be readily traded for fiat currencies through exchanges. This is however as tokens real estate can be readily traded as the seller doesn’t have to wait for a buyer who can afford the whole property to get some value out of their property.
4. Fractional Ownership
Here we bring you that factor as by allowing fractional ownership, it is the blockchain also lowering the barriers to real estate investing as it is typically investments would require significant money upfront to acquire property as where alternatively investors could also pool their money to acquire bigger ticket properties. Thereby through blockchain, investors would simply have to access a trading app to buy and sell even fractions of tokens as they see fit. Additionally the fractional ownership would so help them avoid managing the properties themselves such as maintenance and leasing.
Hereafter upkeep alone can add up to significant costs and dealing with tenants may be a troublesome effort. This also affects related activities such as lending where property owners have to put their properties as collateral for loans to get quick access to cash, while depending on the terms property owners may also continue enjoying the use of their property.
Hereafter the blockchain commands trust and security as decentralized technology as the information stored in the blockchain is accessible to all peers on the network, making data transparent and immutable. Therefore one only has to go back to the housing bubble crash in 2008 to see how greed and lack of transparency in the part of institutions can have catastrophic consequences. Hereby a decentralized exchange has trust built into the system as the information can be verifiable to peers, buyers and sellers can have more confidence in conducting transactions. Therefore the fraud attempts would also be lessened as smart contracts are increasingly becoming admissible records with Vermont, and Arizona passing such laws. Therefore the smart contracts would have more enforceability beyond the technology itself.
Hereafter the transparency associated with a decentralized network can also trim down costs associated with real estate transactions and beyond the savings made by cutting out intermediaries’ professional fees and commissions which are other costs such as inspections costs, registration fees, loan fees, and taxes associated with real estate. Therefore these costs even vary depending on the territory that has jurisdiction. Thereby like intermediaries as these can be reduced or even eliminated from the equation as platforms automate these processes and make them part of the system.
The Conclusion Of The Discussion
There is one interesting fact that the global real estate is worth hundreds of trillions of dollars but is dominated by the wealthy and large corporations as through blockchain technology as more people may be able to access the market where transactions can be made more transparent, secure and equitable. Therefore real estate transactions may eventually become truly peer-to-peer activities with blockchain-powered platforms doing most of the work.