Why Blockchain is Important for Real Estate

Understand the benefits of blockchain technology, and why it matters so much for real estate in the 21st century.

If there's one thing that all investors want, it's to keep investments secure and profitable. This is especially true for real estate, which is one of the most stable and coveted long-term investments available. In the 21st century, technological developments play an increasingly important role in real estate investing.

Throughout the centuries, we've used everything from handwritten contracts to printed legal documents to assert ownership over property assets. Recent years have seen the rise of another alternative, one that might be the standard for real estate investments in the near future: blockchain.

Below, we'll briefly discuss the benefits of blockchain technology, and why it matters so much for real estate in the 21st century.

As with any market, staying updated on real estate trends is crucial for investors to be able to make informed decisions about investments. So when industry-changing technology like the blockchain comes up, it's doubly important that real estate investors stay abreast of developments and what they could change.

Our post on ‘US Housing Market Predictions’ talked about the increased housing demand, price appreciation, and heightened home sales activity in the future. Using the computing power of the blockchain in real estate could streamline these processes and make investing in property so much easier.

Removing the Middleman

Real estate investors know that, despite the great returns, the process of real estate investing has its downsides. Real estate investment can be bogged down by bureaucratic processes, slowing down transactions. The presence of middlemen such as real estate brokers can also make the entire process difficult to trace from start to finish. Blockchain could be the solution to this.

Blockchain technology has been lauded for exemplifying the principles of decentralization, security, and transparency. Tech writer Lloyd Marino says that on the blockchain, every transaction is logged, and no transaction can be deleted. This can keep transactions secure, as well as speed up the process for all parties— thus removing the need for a middleman.

Contracts

According to a guide to cryptocurrencies on Wealthsimple, blockchain is used in cryptocurrency as a decentralized, transparent, and secure ledger. These characteristics make it an excellent method for storing assets, and that holds true for both cryptocurrencies and real estate.

Possibly the best example of blockchain's use in real estate is through smart contracts. Smart contracts link the proofs of ownership of the asset — in this case, property — directly into the blockchain. For real estate, these proofs include documents and contracts. And because the blockchain is so transparent and secured, it's impossible to tamper with the data in these smart contracts.

Tokenization

Another benefit to linking blockchain and real estate can be found in tokenization. Tokens are representations of a store of value in the blockchain. In real estate, you can think of tokens as ownership stakes in a property. Investors have tokens representing their ownership in that asset, and those tokens are secured on the blockchain.

With tokenization, it thus becomes possible for people to make microinvestments in real estate. This fractional ownership enables increased market participation and high capital, creating a broader investor base. It also allows investors to trade or sell these microshares without having to wait for the sale of the property itself.

Blockchain has incredible potential in the world of real estate investments, and we're already beginning to see some of that potential come to light. The question, then, is not whether blockchain can be adapted to real estate investment, but when integration of the blockchain in the industry will become the standard.

You might also like...