As the use cases for blockchain and cryptocurrency increase, the use of blockchain technology is becoming more evident in various industries. Payments, remittances, and foreign exchange have all been affected by cryptocurrency.
One fascinating area is the usage of blockchain technology in the real estate sector. The use of blockchain technology in the real estate market is quite intriguing. Real estate can now be tokenized and sold like cryptocurrencies like bitcoin and ether, thanks to the development of smart contracts in blockchain platforms.
In this article, we will dig deeper into the applications of blockchain in the real estate sector, so buckle down.
What is Blockchain?
A blockchain is a unique type of database. It offers a non-traditional platform for saving information and data in blocks.
It is a digital log of duplicated transactions distributed across the complete blockchain network of computer systems. Each block on the chain stores several transactions and other details. Also, whenever a new transaction occurs on the blockchain, a record gets added to the ledger of each participant.
Applications of Blockchain In Real Estate
The effects of blockchain technology in the real state sector are quite prominent. Previously, exclusively transacting high-value assets like real estate through internet means was not quite normal. The real estate transactions were usually offline.
However, blockchain has made it possible to make transactions online. Blockchain technology has various applications in the real estate sector. We have listed down some of them down-
A New Way of Trade
Commercial and residential properties can be tokenized and kept on the blockchain with a representation and value. As a result, blockchain opens up new avenues for real estate trading, allowing trading platforms and online markets to support real estate transactions better.
Real estate can be tokenized and traded online similarly as we trade equities on a stock exchange. Furthermore, if the seller desires, tokenized assets can be split, letting multiple people participate in a property while maintaining complete transparency of ownership rights.
Blockchain lowers the obstacles in the path of real estate investing by permitting fractional ownership. In order to give ownership of the property, most ventures demand a large sum of money upfront. Alternatively, a group of investors could pool their funds to purchase a larger property.
Effect on Real Estate Registries
Ownership of land and land titles are dependent upon several documents. Hence, these processes are prone to errors and fraud.
However, now blockchain converts old paper documentations into actual digital assets and tracks changes on an immutable ledger that serves as a secure, shared source of truth for documents across numerous individuals and organizations.
A Way to Save Time
Purchasing a house abroad can take weeks or months. However, blockchain is a worldwide technology that anyone with an internet connection can use from anywhere in the globe. So, if we tokenize real estate on the blockchain, the whole process will become simpler and transparent at the same time.
Hence, tokenization will make it easier for anybody to buy real estate from anywhere globally.
We can use blockchain to eliminate intermediaries from real estate transactions, lowering expenses. The real estate ecosystem has traditionally included brokers, lawyers, and banks. However, blockchain could eventually change their responsibilities and involvement in real estate transactions.
Effect on Mortgages
Although blockchain technology and accelerators are not yet widely used in the mortgage business, they have shown promise.
In a traditional scenario, obtaining a mortgage entails several processes. To begin, one must first determine whether or not they are eligible to apply. Next, they must complete an application and wait for confirmation.
However, it is now possible to shorten this procedure by investing in and receiving payments for mortgage on the blockchain directly. This will send the payments to your wallet due to the tokenization of mortgages. In essence, this process enables you to own some part of a property without any legal involvement.
Moreover, banks can benefit from blockchain in managing loans and mortgages properly. A loan or mortgage can be programmed to incorporate essential data such as ownership rights and loan payment history to help future servicing choices by digitizing it.
As a decentralized system, blockchain demands confidence and security. The blockchain makes data transparent and unchangeable by making it accessible to all peers on the network. Trust predicates the system of a decentralized exchange.
Hence, it can be very beneficial in the real estate sector as buyers and sellers can have more trust in executing transactions because peers can verify the information. It will reduce fraudulent attempts as well.
Effect on tenant and landlord contracts
Smart contracts can affect the way tenant and landlord do the transactions and their proceedings. Smart contracts are computer programs that are programmed to transfer money from one point to another if they meet specific conditions.
In the case of a landlord and tenant, the conditions could be a specific date of the month for transferring the rent to the landlord.
Real estate is a sector worth trillion, but sadly it is only driven by the wealthy. But now, more people may be able to access the market due to blockchain technology, which makes transactions more transparent, safe, and equitable.
The application of blockchain in the real estate business has the potential to revolutionize the way homes and property are created, purchased, and sold.