Blockchain and the Future of the Real Estate Industry
Technology in the real estate is growing at a fast rate. There are new innovations resurfacing now and then that will shape the future of real estate. Blockchain is one of them and from several predictions, this one that will stick around for a while. It is a promising technology that will have a huge change on the real estate industry. There are many trendsetters in the real estate industry and each one of the plays a key role. However, not all the aspects in real estate industry are being revolutionised. This is in respect to financial transactions and the legal aspect of real estate industry. All that is about to change with the blockchain technology.
So, what is a Blockchain?
The blockchain is a peer-to-peer ledger technology that helps in calculating finances. It can basically hold anything that can be saved up in a spreadsheet or database. It takes into consideration the act of accounting and processing of transactions. With the blockchain in the real estate industry, we are heading to a future where the buying and selling of properties will be an online show. It functions depending on cryptocurrencies such as ethereum and bitcoins. So, this will not only affect the real estate industry. It will also impact the law with creation of smart contracts.
How it works
The blockchain with regards to cryptocurrencies saves the online transactions in a database. There are high security measures that are necessary , to ensure safety and truth in these transactions. Once the records have been input and verified, then there is no way you can interfere with already stored data. It can neither be changed nor removed from the database. The main aim of the blockchain is to provide a more efficient way of handling online transactions in the real estate industry. Once that is done, then there will be minimal contact between agents and potential buyers. There will also be decentralisation of the Blockchain technology in ensuring there are is no third party involvement.
How Blockchain will affect the future of the real estate industry
Blockchain is set to shake up things a bit in the real estate industry in four different ways. They include; smart contracts, handling of fraud, disintermediation and the currency. This technology will stir up things and enhance transparency in the industry. If anything, it will make the future brighter for the real estate industry. And meet the demands of buyers and sellers indefinitely. It is also meant to act as a solution to the problems the industry has been facing. It is a clear sign that some things have been bringing the company down. This especially applies to third parties and the fraud that was being tolerated by many. All that will a thing of the past and with blockchain technology, real estate industry can move forward to a hopeful future of success.
Smart contracts are key components in the blockchain technology. They are code messages generated at the onset of a transaction. Maintained through its life until when it is complete and settled. The operations on different properties put on record and transmitted to the database for storage. These property can either represent a building or piece of land that is up for sale. The smart contracts are different from traditional contracts and they eliminate all the wrongs with the traditional ones. They will provide a platform for easier transfer of properties and proper recordings. At the same time, there will be reduction of illegal transactions. That were once common with traditional contracts. For the conveyancers, their procedures and mistakes are corrected. As for real estate agents, there will be no need for them, since blockchain technology is capable of handling all their transactions.
Fraud was one of the sticky problems in the real estate industry. Despite measures taken to completely kill the problem, the efforts were futile. Fraud was still persistent in the industry. However, that will soon be put behind the industry bad days as the progress to the bright future is underway. With the blockchain technology, transactions carried out are exclusive and transverse to what is happening. There is no room for monkey business and once information is input in the ledger, there is no reversing or changing that. Nevertheless, there is no need for third party involvements, who were the greatest contributors to fraud.
This is the calling off of the mediator between the buyer and seller of a property in real estate. There were different parties involved in carrying out all the necessary duties on behalf of the buyers and sellers. This includes the brokers, real estate agents, title companies among other interested parties in the real estate industry. All these middlemen will no longer be of importance, once the blockchain technology is implemented. Their roles in the real estate industry have been reduced and accumulated for processing, one by one, systematically in the ledger. Provided they do not have authority over the technology, they cannot interfere at any cost with the blockchain system.
Considering that the blockchain technology is a digital revolution, even currency used will be a digital one. With different cryptocurrencies such as bitcoin and ethereum, business will run as usual. Only difference is that no paper money required. This will in one way or the other affect the stock market for property. Since everything will be a smooth flow, then the stock market may experience a rise due to the simplified transactions. Nevertheless, cryptocurrencies are fast to transfer, cheaper and more secure. The means of handling property sales will remain intact with deposits and leases being accounted for using the digital currency.
So, that is the future for real estate industry when you consider the blockchain technology. Transactions are now more credible and stored records on database can be available to everyone through the public ledger. The best thing though is that, there will be no third parties interfering with transactions.