This was one of our most popular blog posts of 2018. We've updated this post with new information to continue providing valuable content.
We’ve shared how blockchain technology is shaking up FinTech but that’s not the only vertical in which its making waves. Real estate, both commercial and residential, are seeing the benefits of implementing the technology. Thus, real estate is changing thanks to blockchain technology.
Blockchain Technology in Real Estate: What to Know
Blockchain technology allows for real time, efficient, virtually zero risk transactions in the world of cryptocurrency. It is the foundation of BitCoin and other crypto currencies and allows for large scale virtual ledgers. The technology and its benefits have proved helpful in other industries, including real estate.
Significant Risk Reduction
Blockchain is tamper-proof and encrypted. This makes it virtually impossible for lien-, easement-, title- and transfers-related fraud. The increased security and transparency that is inherent in blockchain technology further reduce the risk of title-fraud (Observer).
Cross-border transactions bring a significant risk with current systems. Blockchain technology, however, provides systems that are more efficient and thus safer (Deloitte).
Blockchain technology creates verifiable records of all entries, which means minimal risk of double spending, fraud, abuse and manipulation of transactions (Deloitte).
“Smart” Contracts Make Everything Easier
Blockchain technology is instantaneous (see our primer, here) which speeds up everything from contracts to closings. The implementation of smart contracts automates the process and eradicates any sense of the traditional business day. This automation makes it possible, according to Nick Clare, Head of Project Management, JLL UK, to “create, authenticate and audit contracts in real-time, across the world and without intervention from a middle man … [Smart contracts] have instructions rooted in the transaction so that payment can only be taken as long as the instructions are fulfilled, providing complete transparency to all parties and reducing the likelihood of payment disputes” (The Investor).
Real estate platforms using blockchain technology cuts out intermediaries like lawyers and agents. Buyers can now verify properties and payments for themselves which makes purchasing property a more affordable option for more people. Using cryptocurrencies bypasses bank fees and customized smart contracts cut down exorbitant escrow fees (Cointelegraph).
Blockchain technology helps prevent fraud in the real estate industry. Fraud has become a huge concern in real estate. Blockchain provides an easy way for buyers to authenticate properties. Now complete records of of transfers, and purchase histories, are readily available on secure platforms (Forbes).
Companies like i-House.com have implemented Asset Tokenization Offering (ATO). With ATO people can crowdfund real estate development projects using the company’s cryptocurrency. With lots of room for expansion, these projects have already launched in the United States, Japan, Thailand and the Philippines (i-House).
Although there are still some kinks to be worked out, we go into 2019 with new and exciting possibilities for continuing to change how we conduct real estate transactions. With the help of blockchain technology, property investors now have more power in their hands.
Learn More About New Technologies from CRA
When your real estate firm is ready to implement new technologies that are more secure and efficient contact Computer Resources of America to learn about your options.