Blockchain Changing Real Estate
Blockchain changing real estate should come as no surprise really. The protective technology is ideal for large value transactions conducted in the safest way and that’s where blockchain comes in.
As explained recently by Investopedia, there are six big ways that blockchain is changing the game for real estate:
1. Platforms and marketplaces: tokenization
Traditionally, buying and selling property requires… yep, you guessed it: buyers and sellers. All of this is being revolutionised by blockchain, with one company, ATLANT, leading the way. Rather than using realtors and agents, property value will be converted into tokens (e.g. Bitcoins). Once property value is converted into tokens then it can be treated like currency and traded like stocks and shares.
2. Increased liquidity of asset
What does being traded like stocks and shares also imply? Liquidity. Liquidity means you can get to your funds more quickly and essentially be more ‘cash rich’ than ‘asset rich’. Illiquid assets mean it’s really difficult to get to the value of the things that you own. For real estate, this means that you don’t need to wait for a buyer with the funds to buy the whole property you can just trade your tokens. Then you can easily exchange them for centralised funds through exchanges.
3. No middlemen
Another benefit of tokenization is repealing the middlemen. No realtors, no agents. Quicker, simpler and more cost effective. With a system like this, using smart contracts, the traditionally held roles of lawyers and agents will change as the technology can do the talking.
4. Fractional ownership
This explains further the tokenization of property. Fractional Ownership essentially means you can own parts of the value of the property meaning you can invest with a smaller amount. You don’t have to have the full $100k to get on the property ladder.
Basically the tenet and the very reason we think blockchain is a great financial option for almost all scenarios: the entire system is decentralized. Because the information is stored in a blockchain and transparent you can trust all the data. Everything is verifiable and trying to defraud the system is a lot harder than systems that are more opaque. Smart Contracts are also integrated and are increasingly becoming permissable.
6. Cost and true peer-to-peer
Decentralization, lack of middlemen and the fractional ownership aspects of blockchain investment in real estate all make it so much more affordable. No interest to be paid on loans, less commission, less on admin fees and registration fees – everything will cost less. Fortune also estimates that real estate globally is worth $217 trillion, much of which is owned by multinationals and not by individuals. If Real Estate were to become more truly peer-to-peer, the outcome could be a more equitable system.
Overall, it seems like a bit of a no-brainer really.
With Blockchain changing real estate, what other industries and sectors will it help? Read about the diamond industry being revolutionised by Blockchain.