How Blockchain Can Influence the Real Estate Market
Blockchain technology in the real estate market? Does that sound strange to you? If so, then you're not alone. Whether or not you know what the technology entails, there's still much to learn about the subject mentioned above. How can blockchain influence real estate investment? Well, just like it has done to other numerous industries that have realized the positive impact of using the technology, blockchain can influence the real estate market. Oops! But wait, what's blockchain in the first place? That's a lovely question, especially for newbies in the crypto industry. Let's discuss that and more about blockchain and its impact on the real estate market.
What is Blockchain?
Blockchain is a technology or system that allows for the secure maintenance and permanent storage of digital list/ledger of records, contracts, transactions, or other information across a computer network. Its power depends on the automated execution of a transaction and the ability to form fractional ownership in real estate property using tokens.
Blockchain works in four significant ways; - imposing a set of rules to validate the occurrence of a transaction, securing each verified data record, and combining them using cryptographic techniques learn more from Instant Loan. Finally, it adds the recorded data (blocks) to the ledger, distributed across several global computers. Eventually, the new transaction details become accessible to each network participant. The system's ledger is most secure, as no recorded data can either be altered or removed once added.
Blockchain and the Real Estate Market
With the advancement of technology in almost every sector, embracing blockchain technology will be a great move by the real estate industry. As a secure, transparent, and efficient system, blockchain can eradicate some of the traditional real estate industry's biggest problems. These include; - limited access by people, lack of transparency, very high fees, lack of liquidity, and prolonged transaction speed. As a replacement, it brings in numerous utilities into the sector. Here are the areas it can transform:
Property Management. This is a nightmare since several stakeholders are involved. Currently, many assets are managed either through unreliable software or offline using paperwork. However, with blockchain comes smart contracts (automated contracts) to manage the entire property management process. Smart contracts are self-executing instruction codes that can automatically supervise and execute transactions once specified conditions are met. By utilizing them, leases, purchases, and sales agreements that aid real estate transactions can be quickly enforced.
Payment Systems. Existing financing and payment systems are slow and expensive, especially if international transactions are involved. Completing a mortgage approval process now takes about 30-60 days for residential property and about 90 days for commercial ones. Using verifiable digital identities can reduce the time and speed up the process. Tokenization can also help ease the payments by enabling the use of popular cryptocurrencies like Bitcoin, Ethereum, or Litecoin as payment coins. That can reduce settlement duration and even transaction. It can also bring several other benefits like portfolio diversification.
Title Management. Most real estate titles are usually in paper form, which results in a lot of errors. Property owners end up incurring additional legal charges to ensure validity and precision in their titles. With blockchain, people can build secure digital records of land titles, thus providing people with trusted, verifiable property ownership proof.
Property Ownership. This can also improve through utilizing blockchain, which will allow fractional ownership of property. That allows multiple people to possess property fractions together instead of the current primary model of individual ownership. It can also increase asset accessibility by reducing the minimum amount of capital required to obtain real estate exposure as an asset class.
Property Search Process. Third-party platforms are the most common way to access property listings. Even so, they lack consistent processes, have poor communications, are subscription-based, and tend to induce high fees. Blockchain can allow property listings to exist in a single decentralized database. That can enable access to reliable data at a lower cost.
Advantages of Using Blockchain in Real Estate Market
People would want a transformation that would be better than the existing situation. That's what blockchain promises to the real estate sector. Here are the benefits of blockchain that the industry can take advantage of:
Speeding Up Transaction Process. The whole process can be accelerated using blockchain. There won't be a need for middlemen, a lengthy approval process, and title searches. The database in use can verify homeownership's validity faster and allow quick title transfer without a third-party requirement.
Enhancing Liquidity. Though considered an illiquid asset for long, with cryptocurrencies, real estate can be liquidated. This means that instead of sales taking long to conclude, tokens can make real estate readily traded. A home seller won't have to wait for a buyer who can purchase the whole property to obtain some value from it.
Security of Stored Online Data. Blockchain allows for immutable data storage. This can ensure the safekeeping of property records like deeds, surveys, and other transaction details. People won't risk losing valuable data or having them fall into the wrong hands anymore.
Availability of Crucial Information. As a decentralized technology, it eliminates individual control over every facet of the industry, including information. It builds trust and enables every participant to access valid and trustworthy information, which can be verifiable.
Cost Reductions. The transaction costs related to real estate always tend to be high, but that won't be with the blockchain. It will cut down costs by eliminating fees like commissions, inspection costs, taxes, registration fees, and loan fees. By automating all the property investment processes, all the costs of carrying them out will be slashed out.
Improving Transparency. The outdoing of intermediaries is an excellent step to increased transparency in real estate dealings. Every information is digitally and immutably recorded, making it difficult to manipulate.
The Bottom Line
As a multi-trillion-dollar global sector, real estate requires a more efficient way to carry out its activities. That should be transparent, less costly, increase transaction speed, balance the industry, and more. Blockchain technology can make all that possible! If you're into real estate investment, try out the new technology and enjoy the benefits. You can also turn to Bugis Credit for further assistance on cryptocurrency-related issues.