Privacy: Who Owns The Data
It’s no secret that data is becoming increasingly valuable. In fact, it’s now considered one of the most valuable commodities in the world. So it’s not surprising that many companies are trying to get their hands on as much of it as possible. One industry that has been collecting data for years is the real estate industry. And with the advent of blockchain technology, real estate companies are now able to collect even more data than ever before.
But who owns this data? And more importantly, who gets to control it? It’s a question that’s still being debated, but there’s no doubt that blockchain is changing the future of real estate transactions. By giving buyers and sellers a secure and transparent way to do business, blockchain is making it easier for everyone to get the information they need to make informed decisions. Blockchain-based platforms are also starting to emerge that allow users to buy and sell property without using traditional intermediaries. This could further reduce the costs of buying and selling property and make the process even more efficient.
Increases The Speed Of International Deals
International real estate deals typically have a variety of complications that dont occur when the transaction is between two parties in the same country. For starters, theres the exchange rate. Then theres the fact that it can take several days to get paid when the money is transferred between systems, complicated by the fact that during this time the exchange rate can change.
Blockchain solves all this because youre transacting digitally with a cryptocurrency, so the usual exchange problems dont occur.
What Are Blockchain And Cryptocurrency
Are blockchain and cryptocurrency the same thing? The simple answer is no. When you realize all these terms are not synonymous you can ponder the question of what are the future benefits of real estate and blockchain.
Blockchain is a digitalized system of storing important coded data in specific blocks. In real estate that data might include information about property titles, specifics regarding accurate measurements, 3D tours, floor plans, financing, and taxes. Once information is entered into a block it is immutable meaning it cannot be altered.
Updating the particulars requires entering in additional information but without removing the original data, thus forming a chain of information for every transaction. This essentially forms a digital trail of everything entered into the block or ledger in chronological order.
Cryptocurrency is digital money that has no physical form, existing only on computer systems. It uses blockchain technology as a way to record, encrypt, and transfer transactions controlled solely by its users and the algorithms of the computer.
Though cryptocurrency may play a role in blockchain technology and real estate at some point, the industry will likely use blockchain initially for smart contracts, improving the liquidity of real estate assets, and speeding up transactions.
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Is The Industry Going To Change While Using Blockchain In Real Estate And In The Future
Global Real Estate is in the middle of growth in 2022. But, right now, it is more accessible by enterprises like it was before. With blockchain use in Real Estate, more people will receive access to transactions. And not just simple transactions, but peer-to-peer ones without an intermediary. And, they can count on transparency, security, and equitability here. Real Estate transactions are actively shifting towards peer-to-peer activity. And, blockchain platforms are the means allowing this to happen. The blockchain platform is a breakthrough for simple people to be involved directly. How great is that?
Look at how quickly NFT became the top trend on the market? And, it is also blockchain. Inoxoft is happy to partner with Sandmilk, who creates brilliant NFT collections using blockchain and token technology. The same will surely happen to blockchain development in Real Estate. The market is ready and the future is promising! Its time for blockchain in Real Estate startups to come forward with new ideas. With their innovative decisions, the Real Estate industry will have a bright future ahead.
Find out more about real estate development technology!
What Is Blockchain In Real Estate
The relatively recently coined term blockchain has become synonymous with todays most popular cryptocurrencies: Bitcoin, Ethereum and Litecoin . However, it is worth noting that the use of blockchain in real estate isnt relegated solely to crypto assets. While each cryptocurrency takes advantage of blockchains ability to act as a ledger across a vast network of computers, the ability to track transactions and records may be utilized by just about any and every industry, not the least of which includes real estate.
In its simplest form, blockchain real estate will utilize a network of computers and nodes to act as a more advanced and secure escrow company. Instead of simply trading closing documents for cash, however, blockchain real estate capabilities may be extended to almost every facet of the industry. Consequently, blockchain real estate may help participants in the real estate sector exchange currency, records, legal contracts, and other types of information over a safe and secure network.
More specifically, heres a step-by-step example of what the industry can expect from blockchain real estate exchanges:
A seller accepts an offer on their house and requests the money over blockchain.
The sellers request is facilitated by a vast network of advanced computers, otherwise known as nodes.
Using predetermined algorithms, the nodes process the request for cash.
In order for the exchange to take place, the nodes must verify the request.
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How And Why Was The Technology First Used
The first popularized blockchain application, Bitcoin, launched over ten years ago as a digital currency system that didn’t require a centralized party or bank. Bitcoin and Blockchain are often confused as one in the same, but in fact they are two distinct and separate components. You should think of Bitcoin as an application that is using blockchain as its underlying technology, similar to how a mobile app on your phone may run on iOS or Android.
Take Advantage Of Fractional Ownership
Fractional ownership is one of the most exciting frontiers that blockchain technology is poised to innovate within the real-estate industry. The fractional ownership created by tokenizing a property is one of the most equitable innovations blockchain has introduced it changes the game for that one person who wants to get into real estate but can’t find five friends who also have $10,000 to pool for a downpayment and renovations on a duplex.
Now, through online marketplaces and cryptocurrency exchanges, the demand for these types of tokenized real-estate assets is pre-aggregated so small-time players can more effectively pool their resources. Smart contracts can then further simplify the long-term ownership by taking in rent payments and disbursing proportionate shares directly to the wallets of the property owners.
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New Platforms For Real Estate Transactions
With the tokenization of assets, new platforms are being launched that aim to streamline real estate purchasing and investing. There is a lot of room for these platforms to operate and disrupt the complex transactions of real estate.
For instance, platforms like Natmin focus on utilizing blockchain to facilitate escrow transactions, cutting down on closing time and costs. Another startup, Harbor, breaks down real estate assets into tokens, so owners can offer fractional shares of their property and small investors can build real estate capital.
If you owned a large, multi-unit apartment building in desperate need of remodel, you could use Harbor to issue shares of the apartment building. The money gained from these shares could be reinvested to improve the building, allowing you to charge more rent. Small investors could get in on investing in your property and reap some of the benefits of owning a rental unit without the risks.
Improves Real Estate Liquidity
Because investments are tokenized and can be split into fractions of ownership, this has the potential to increase your liquidity. For example, imagine a future where you wanted to do an addition to your home. You could sell 20 tokens, each worth 1% of your equity to investors to find your project. They would get their portion of the investment when the property was sold under the terms of a smart contract, potentially years down the line. Alternatively, they could trade their token on the open market to cash out early.
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Advantages Of Blockchain In Real Estate
Previously, high value real estate transactions were conducted offline involving a lengthy process of paperwork, authentication and registration before one could own a property. This tedious process has discouraged many potential investors from entering into the real estate sector. However, the introduction of blockchain technology has facilitated connecting buyers and sellers over a secured online platform. It has also provided easy accessibility to owning properties to various individual investors and not just institutional investors. Blockchain enables tokenizing properties in a way that real estate assets can be traded in the same manner as stocks.
Blockchain has enabled an easy property search process that has conveniently ruled out the requirement of brokers in the process of purchasing real estate. Buyers no longer need to get in touch with lawyers and banks to carry out high value transactions. Blockchain has effectively overcome one of the biggest hurdles in real estate investing by removing middlemen and unnecessary costs in the form of commissions, registration fee and service fee that are charged by these middlemen.
The Future Of Real Estate Transactions On The Blockchain
Managing Partner and International Real Estate Investment Consultant at Barnes International.
Earlier this year, the mayor of Miami proposed allowing people to pay property taxes or city fees with cryptocurrency. Shortly after, a Miami penthouse sold to an anonymous buyer for $28 million paid entirely in cryptocurrency, making it the most expensive known residential crypto real estate transaction in the U.S. to date.
I always have been a believer in the future power of digital assets. In 2017, I persuaded a seller client to accept Bitcoin as payment by arguing that it could be an even better anti-inflationist asset than real estate itself, thinking this would be an experimental sale. Four years later, today I am seeing more and more sellers and developers accepting cryptocurrencies as a form of payment. Four years from now, I predict that blockchain-integrated real estate will be implemented on a whole new level beyond payments in a digital currency.
Blockchain platforms associated with the real estate sector provide an answer in terms of speed and safety that can considerably reduce the risk of fraud. All stages of the real estate transaction are concerned by this innovative technology and its implications for simplifying the transmission of data and reducing the time between the signing of the preliminary sales agreement and the deed of sale before the notary.
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Property Search Platforms And Marketplaces
In the current scenario, buyers and sellers connect on multiple property listing platforms. These may demand fees. The property data on them may be inaccurate or outdated. Blockchain can help prevent these challenges. It can enable storing all property data on a single centralized database. It will offer the following benefits:
- Better management of all your properties with one comprehensive system
- Accurate data
- More people can invest with minimum capital
Whats Holding Blockchain Back In The Real Estate Industry
The biggest hurdle for blockchain now is insufficient knowledge.
Until 2019, most real estate investors only knew blockchain as it connects to Bitcoin.
Today, there is an increasing number of companies and institutions that are exploring blockchains uses as cryptocurrencies begin to blow up.
Right now, theres an inability to scale in the industry because of a lack of standardization.
However, the U.S. federal and state regulatory bodies are beginning to pass Blockchain-related legislation with bills addressing concerns around cryptographic signatures, standardization of smart contracts, and record keeping.
In the next few years, well begin to see progress made in this area.
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Blockchain Opportunities And Challenges
Our Blockchain in commercial real estate report takes a deeper dive into the ways blockchain technology can create opportunities while alleviating some of the existing challenges. We look at six use cases for improving the leasing and purchase and sale process through the use of blockchain:
Blockchain Real Estate: Live Examples
Since Blockchain is a perfect solution for the problems in Real Estate, not only private start-ups, but also the governments have taken initiatives to adopt it. Swedens land registry authority and a group of participating banks, businesses and startups are in the final stages of implementing a Blockchain real state pilot. In the United States, states such as Vermont and Arizona are on their path to recognize Smart Contracts as authentic points of reference for real estate transactions.
New York-based startup, ShelterZoom is on the verge of launching real estate application that will enable buyers and sellers transact deals over a blockchain-based network. The platform allows sellers, buyers, and real estate agents to see all offers and give acceptances in real time.
Deedcoin is reducing the typical 6% real estate commission to 1% to connect buyers and sellers of property. Ubiquity has developed a Blockchain real state platform based on SAAS model that enables users to record property information and track the chain of ownership securely.
There are several other projects, like Propy, Harbor, BitRent, Blocksquare, Averspace, Atlant, BrikBit, CryptoProperties, SMARTRealty, and more, that are working on similar concepts.
If you are ready to implement blockchain in real estate business, we are here to help you. Consult our Blockchain experts and know the feasibility of your idea.
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Blockchain Real Estate Platform Development 2nd Approach: Ethereum Dapp
The 2nd approach involves creating an Ethereum DApp . You will need to create an ERC 20 crypto token too. ERC 20 is a well-known Ethereum standard. Most crypto wallets can handle ERC 20 tokens.
Read more about it in What is ERC-20 and what does it mean for Ethereum?.
Similarities with the 1st approach
You will find many steps from the 1st approach relevant here too, and you can follow the exact same instructions. The common steps are the following:
I had earlier described how to build similar DApps in How to Build Online Marketplace on Blockchain Like OpenBazaar?, and you can consult that guide.
Tokenization To Enable Smooth Land Registry Process
A token, in the true sense, is a Smart Contract on Blockchain. However, the real use case of a token is the digital representation of a physical asset. An asset, in this case, a property can be said to be tokenized, when a token representing the asset is created on the Blockchain that has a unique identity and cannot be traded for another token . Whoever owns this digital token can be considered as the owner of the property.
Thus, it becomes easy to prove the ownership of the property. To add, these tokens can be easily traded. This feature is particularly helpful in buying/selling property, anytime, anywhere, almost instantaneously.
Tokenization might not replace the legal paperwork involved in purchasing the property , but it can act as a quick and reliable system to make the first level of commitment in the purchase process.
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Challenges For Nfts In Real Estate
Just like every revolutionary technology, whether it is the mobile phone or the internet, people are wary of NFTs in real estate. What is NFT in real estate? Many people are asking this question, particularly because the real estate sector is a slow-changing industry. Only recently, virtual tours and technological advancements have been taking over the real estate sector. As professionals and buyers in real estate struggle with new technologies, is it reasonable to introduce NFTs? Well, there are some noticeable challenges with the adoption of NFTs in the real estate sector.
First of all, you would have the obvious resistance to a new technology playing foul in the adoption of real estate NFT alternatives. Most importantly, blockchain and NFTs challenge the status quo of many intermediaries, which happen to be title companies. Therefore, we may have to wait for quite some time before we actually witness large-scale applications of NFTs in real estate.
The Benefits Of Decentralization In Real Estate
Buyers and sellers can have more confidence in transactions since fraud attempts are essentially eliminated.
The tamper-proof characteristic of the blockchain database could replace siloed databases and allow real estate businesses to compile data and documents from many shareholders in a distributed manner.
Real estate companies deal with highly sensitive information and as a result, having a single point of weakness can be catastrophic. With a decentralized process, the likelyhood of data loss data under normal circumstances is very low.
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Get Your Desired Liquidity More Quickly
This same tokenization concept can be used to provide an owner or seller with liquidity. For instance, I’m selling my $5 million home in Los Angeles. It might take several years for a buyer to like the home enough to make that sort of capital commitment, but by creating fractional ownership through tokenization of the property, I could sell off one million $5 shares and create the liquidity I desire much more quickly.
No Intermediaries Are Needed
For those, who think that brokers, lawyers, and banks will soon be out of the Real Estate selling and buying process stay calm! These intermediaries will last as there is still demand on the market. Besides, some of the users trust brokers and banks more. But, it should be noted that blockchain applications in Real Estate allow buying and selling property directly. This makes the process faster and reduces lots of human factor-based risks.
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