Blockchain and bitcoin technology are still in their infant stage. However, the technology has made steady progress as it begins to disrupt major industries and the debate over the potential uses and impact blockchain technology could have on the real estate industry is also heating up.
Commercial real estate has been considered a slow mover when it comes to adopting new technologies. This may also be the case for the acceptance of blockchain technology within the industry. All that could change fast if it could improve the bottom line. There are several ways in which bitcoin could impact the real estate industry, and we’ll review a few of these ideas and point you in the right direction in case you’d like to delve deeper.
Blockchain technology not only represents a new way to exchange funds or track payments, but it also has the potential make contracts smarter. The Blockchain’s distributed ledger can trace a series of events in chronological order, being able to mathematically verify these events eliminates instances of tampering or fraud.
The secure cryptography ledger can record events and create digital IDs for a multitude of scenarios. Some usage examples of this type of ledger could be for mortgage payments, escrow, or deed transfers. To make things simple, they allow for if-then statements in contracts to be made, then demanded fulfillment
Imagine if you finished paying your mortgage or you completed escrow on a new home or building. The moment those funds and conditions were met the digital contract would instantly transfer that deed ownership. Some would argue the Blockchain is the most reliable transaction record system ever created.
Investment into any foreign market is difficult today. There are many government conditions and terms, exchange fees, taxes, and regulations. Each country is different. However, all of them have their friction points.
Blockchain technology can exchange any value funds to any party regardless of location, identity or government regulations. This occurrence could bring up many issues in the future, but the demand to transfer funds and take advantage of changing currency rates will always exist.
Banks are already using funds to research how blockchain could change the way they transfer funds. Creating a certifiable digital ID allows for funds to be fully tracked. In real estate, the use of a proof of funds document or a bank letter is often used to show purchasing capabilities. These documents can often be forged or outdated. Often these documents are saved as simple .pdf files and can even be emailed and forwarded on without consent.
Blockchain provides a certifiable and instant way to verify ownership of funds. Picture an instance where you have verifiable proof of funds and a digital transfer of a deed. The Blockchain could allow two parties to exchange large assets instantly, securely and even anonymously.
Blockchain technology could allow crowdfunding to be even more liquid than it is today. New start-ups have come into the real estate tech scene recently that operate as secondary markets for alternative real estate investments. Companies like CFX are already setting up marketplaces to exchange these assets.
Bitcoin and sidechains could allow for these assets or fractional ownership in real estate to be traded quicker, and at a more accurate market price.
The Internet of Things
Just like blockchain, the possibilities for the internet of things are endless. Similar to our above scenario where blockchain technology could allow for smart contracts, the same could be said for the internet of things. The sharing economy has already taken hold as a major player in the tech space. The opportunity to share rides, cars, apartments, and homes has rippled through our economy. In these instances, people are stuck doing some of the process or transaction. That may be dropping off keys for an AirBnB, or needed to meet someone in person to exchange a Getaround. What blockchain could influence is how we use tokens to grant permission for certain things to take place. A blockchain token could be used to open that apartment or car, or maybe to unlock a computer or phone.
Startups like International Blockchain Real Estate Association are starting to populate the blockchain / real estate space, with so many potential uses, only time will tell if blockchain can emerge as the next everyday real estate technology.