The future of financial services is blockchain and cryptocurrency. With the advent of this technology bringing about revolutionary changes across multiple industries, it is very likely that blockchain will soon take over the real estate industry.
Blockchain is a decentralized ledger that can be updated by multiple parties working in a consensus system. All such entries are updated digitally, legitimately, and immutably, resulting in an unchangeable transaction record.
Bitcoin, the world’s first cryptocurrency, is maintained by the Blockchain ledger. Cryptocurrency is the first virtual currency that is not issued by a central authority and thus remains immune to government manipulation or interference. This allows for a seamless, secured payment method conducted online.
Present-day Real Estate Industry
The real estate industry, growing day by day, has the next most extensive financial activities. It is only logical that blockchain disruption will soon influence the industry, and offline transactions will switch to a decentralized ledger.
The present-day real estate industry, characterized by purchasing, investing, leasing, selling, cash flow, and asset management, has been working satisfactorily with standard operating procedures worldwide. So, why embrace a cryptocurrency future of real estate blockchain collaboration at all?
It is because there is more than one pitfall in the present-day real estate industry.
1. Limited access
Besides limited finances barring real estate investment for middle-class investors, the industry is not accessible for everyone beyond that. To name a few, some of the significant barriers faced by such investors include credit scores, accreditation, citizenship, international bank accounts, financing, and fund managers. The extensive involvement of mediators further raises concerns for the population of real estate.
2. Risks of inaccuracy and exploitation
Unfortunately, real estate is plagued with scams and money laundering due to an untransparent business process. An estimated $1.6 trillion is laundered via the real estate industry. Moreover, a large population of investors backs off from real estate investment due to unrealistically high fees. There is a long list of expenses that come with hiring mediators to carry out the process, such as attorney fees, brokerage fees, investment fees, taxes, exchange fees, transfer fees, etc. This quickly raises the overall budget for most of the investors.
3. Low liquidity
The current real estate industry has superior low liquidity levels. There aren’t enough buyers of other assets, mainly due to low availability, time-consuming and lengthy processes, too many regulations, and so on. The illiquidity in real estate is a pressing problem as it takes quite a long time for sales to conclude.
4. Slow, errored, and inefficient
Of course, the biggest horror of real estate investment is dealing with a series of tedious issues. It takes a long time to find or locate the right property. Following it, one may have to ensure a slow transaction process. Traveling through such an inefficient and errored procedure is a bitter experience for anyone involved.
How can blockchain improve real estate?
It needs no saying that real estate companies who can switch to work harmoniously with blockchain technology for their dealings will easily win the field. Blockchain has the potential to eliminate all those errors mentioned above and more for a seamless and highly efficient business transaction.
1. It can help in financing
A switch to the blockchain can help finance real estate by enabling a prompt and accurate loan origination system. Moreover, it allows a network of factorial ownership where investors can purchase even fractions of the tokens via a trading app they see fit for their budget. This eliminates the barrier of limited accessibility.
2. It is trustful and transparent
The blockchain ledger is fixed and immutable. It eradicates the need for middlemen and intermediaries, posing a threat for scams. Any new listing of real estate will go through a verification process, automatically removing any fraudulent scope within the industry. All properties listed will have a particular digital address, which, if required, can even be encrypted to enable authorized access only. The risk of exploitation by intermediaries, or general frauds, will be removed entirely.
3. It can increase liquidity levels
A cryptocurrency future of real estate blockchain collaboration conceives a platform where real estate companies from any geographical location can offer their services to buy and sell properties. Other individuals can also enlist their assets on public platforms for maximum reach.
4. It is cost-effective, efficient, and flawless
The maximum time transaction can take over the blockchain is 24 hours, and the minimum is few minutes. The scope of blockchain translating efficiency onto the real estate platform is prevalent. From “smart contracts,” consensus mechanism, trimming intermediary costs, and automation, the future of real estate with blockchain collaboration is every investor’s dream come true. There would be increased security, transparency, rapid transactions, and an authorized, recorded, and seamless process to operate, possibly nationwide.
The future of real estate is decentralized
With smoother, safer, and easier transactional processes, blockchain can transform the future of real estate. Many companies have switched to blockchain technology already, and the rest are eagerly following suit. Hereafter, an effective real estate service will enable real estate transactions that are peer-to-peer and powered by blockchain-platforms in combination with offline interactions.