The Chain logo

Blockchain and The Future of Real Estate Investing

How Blockchain Changes Real Estate Investing

By Bhoopendra Kumar(Bhuppi)Published 2 years ago 4 min read
Like
Blockchain in Real Estate

Overview

Before jumping to the use of blockchain in real estate, let’s first understand what blockchain is? In short, blockchain is the technology that underpins the cryptocurrency system. It provides a time-stamped series of immutable, recorded data managed by a cluster of computers rather than one entity. Each of these data blocks is secured and bound to each other using cryptographic principles, hence the name “blockchain”. This makes falsifying data incredibly difficult.

Real estate hasn’t escaped blockchain disruption either. Previously, transacting high-value assets such as real estate exclusively through digital channels has never been the norm. Instead, real estate transactions are often conducted offline, involving face-to-face engagements with various entities. Blockchain, however, opened up ways to change this. The introduction of smart contracts in blockchain platforms now allows assets like real estate to be tokenized and be traded like cryptocurrencies like bitcoin, Ethereum etc.

Blockchain has opened the doors for making real estate transactions more straightforward and faster than ever. While technology is still in its nascent stages, blockchain will increasingly be used for smart contracts (i.e. automated contracts) and tokenization.

There are the following ways blockchain can change the real estate game and open real estate for trading:

Real Estate Smart Contracts

The blockchain offers unparalleled speed via the establishment of smart contracts, which do not require the intervention of third parties such as government authorities, banks or juridical systems etc. These digitalized contracts are equivalent in some ways to paper contracts. However, they allow parties to secure all the information and prevent their modification.

In practice, most smart contracts are used in the automation of value exchanges in the form of virtual currencies, the cryptoassets. All the accounting entries corresponding to these exchanges of digital values are automatically recorded in the blockchain, making the transfers visible and immutable. The conditions of these intelligent contracts leave no room for doubt or interpretation present in our everyday transactions.

No Intermediaries

Brokers, lawyers, and banks have long been part of the real estate ecosystem. However, blockchain may soon usher in a shift in their roles and participation in real estate transactions, according to a report by Deloitte. The new platform can eventually assume listings, payments, and legal documentation. Cutting out the intermediaries will result in buyers and sellers getting more out of their money as they save on commissions and fees charged by these intermediaries. In addition, this makes the process much quicker as the back-and-forth between these middlemen gets cut.

Liquidity

Real estate has long been considered an illiquid asset. This isn’t the case with cryptocurrencies and tokens since they can, in theory, be readily traded for fiat currencies through exchanges. However, as tokens, real estate can be readily traded. A seller doesn’t have to wait for a buyer who can afford the whole property to get some value out of their property.

Fractional Ownership/ Crowd Funding

By allowing fractional ownership, blockchain also lowers the barriers to real estate investing. Typically, investments would require significant money upfront to acquire property. Alternatively, investors could also pool their money to earn more extensive ticket properties. Now, sponsors can solicit capital contributions from a larger pool of investors rather than only amongst those they know.

In addition, fractional ownership would also help them avoid managing the properties themselves, such as maintenance and leasing.

If you want to invest in real estate as low as 10K, then click here

Decentralization

Blockchain commands trust and security as a decentralized technology. Information stored in the blockchain is accessible to all peers on the network, making data transparent and immutable. One only has to go back to the housing bubble crash in 2008 to see how greed and the lack of transparency on the part of institutions can have catastrophic consequences. A decentralized exchange has trust built into the system. Since information can be verifiable to peers, buyers and sellers can have more confidence in conducting transactions. Fraud attempts would also be lessened.

Costs

The transparency associated with a decentralized network can also trim down costs related to real estate transactions. Beyond the savings made by cutting out intermediaries’ professional fees and commissions, other costs include inspection, registration, loan, and taxes associated with real estate. These costs even vary depending on the territory that has jurisdiction. These can be reduced or even eliminated from the equation as platforms automate these processes and make them part of the system like intermediaries.

Conclusion

The biggest challenges of blockchain to real estate are government regulation and the people’s trust in the technology. I believe government regulations is secondary, but trust is still the primary issue. We no need to explain what technology is rather than the benefit of what this technology does for real estate.

Global real estate is worth hundreds of trillions of dollars but is dominated by the wealthy and large corporations. Through blockchain technology, more people may access the market where transactions can be made more transparent, secure, and equitable. Real estate transactions may eventually become truly peer-to-peer activities with blockchain-powered platforms doing most of the work.

You can find properties based on data insights like application and yield across India from Aasthy

blockchain
Like

About the Creator

Bhoopendra Kumar(Bhuppi)

Entrepreneur, Agri enthusiastic, Co-Founder and CEO of KrishiHub(exited). Alumnus of IIT Guwahati. Have 9+ years of industry experience working across various lead roles in MNCs and startups like - HP Enterprise, TaxiForSure, DataWeave etc

Reader insights

Be the first to share your insights about this piece.

How does it work?

Add your insights

Comments (1)

Sign in to comment
  • Sofa Kraudabout a year ago

    Great post! Can I share your ideas in my article about blockchain in real estate? Here: https://www.cleveroad.com/blog/blockchain-real-estate/ With reference to you, of course!

Find us on social media

Miscellaneous links

  • Explore
  • Contact
  • Privacy Policy
  • Terms of Use
  • Support

© 2024 Creatd, Inc. All Rights Reserved.