Bitcoin & Blockchain, the PropTech Community’s New Best Friends
The future of real estate is smarter, digital-driven, and more secure
Blockchain technology is taking the commercial world by storm, introducing great utility into many industries – including real estate. The listing, leasing and sale of properties is shifting away from traditional in-the-flesh agents, pen-and-paper contracts and physical money, and towards the digital space. The result blockchain and virtual currencies, like Bitcoin, are revolutionizing an industry that historically lacks transparency, liquidity, accessibility and speed, involves high fees and requires much capital to be put up – upfront.
Here’s how:
Decentralization
Traditionally, real estate data and processes are siloed, making it more challenging for agents and accommodation seekers alike to fully understand a given real estate market and its available properties at a given time. Blockchain technology creates secure and tamper-resistant common databases containing information and documents (standardized records) from multiple industry stakeholders and accessible to all, at once, as no single entity has ownership over the data. This makes the property search process simpler, faster and more comprehensive. Decentralization also ensures that even if one or more servers fail, none of the data accumulated and analyzed is ever lost.
Tokenization
Blockchain technology additionally makes real estate transaction processes more efficient, by enabling the tokenization of real-world assets – properties. This way, buyers and renters can do away with bank transfers and their lengthy waiting periods, and simply “click” their way through the streamlined payment process. Tokenization also enables partial ownership of properties, as several people can enter a multi-signature smart contract and put down however many tokens they please (see below).
Smart Contracts
To improve trust and resolve the lack of transparency, blockchain creates digital identities and self-executing, automated contracts called smart contracts. Smart contracts are a set of programming functions that automatically execute as soon as the previous function completes. They protect property owners from fraud, while directly removing the need for intermediaries, such as real estate agents to communicate issues between buyers and sellers, title companies to verify ownership, banks to process and approve financing and lawyers to make sure everything is on the straight and narrow. The chain of ownership over properties and titles are seamlessly managed on the blockchain, constantly and automatically confirmed by government and other relevant agencies. As such, secondary benefits of smart contracts (and blockchain, by association) are reduced time to closure and lower associated costs. And who doesn’t want to save a few extra percentages on their big property purchase?!
Smart contracts can even be converted into rental contracts, automating lease agreements with little to no need for monitoring. Both sides’ digital signatures are stored on the blockchain, ensuring the agreement and each side’s responsibilities are publicly known (and can be upheld).
Bottom line
Blockchain and virtual currencies have led to the democratization of the real estate industry, where all information is known and accessible, all transactions are transparent and secure, and property ownership, in part or in full, is finally within more peoples’ reach. Unlock the potential of blockchain for your Proptech innovation and help usher the real estate industry into a smarter and more secure future.
