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Blockchain and Smart Contracts Highlight Potential of Making Real Estate Transactions As Simple As Online Shopping
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The global real estate industry was valued at more than $280 trillion quite recently, making it a more valuable asset than all the shares, stocks and securitized debt across the world combined. The new-age blockchain technology has the capacity to revolutionize and disrupt this two hundred trillion-dollar industry.
Blockchain technology has made its way into the mainstream industry over the last decade. As per a survey conducted by the World Economic Forum, more than fifty percent of executive IT and communications technology experts believe that by 2025, over 10% of the global GDP information would be stored on the blockchain technology. Many leading industry players are slowly realizing the scope of blockchain beyond Bitcoin, and laying special emphasis on its role in real estate transactions.
Impact of blockchain on real estate
Blockchain can be considered to be an immutable, shared ledger that facilities the system of recording transactions, as well as tracking assets in a particular business network. By having this single, public version of record, high transparency can be maintained in real estate transactions.
Blockchain enables the seller to immediately prove the property ownership, while the buyers can instantly prove that they have the desired funds in hand. In addition to increasing transparency and decreasing the chances of fraud, usage of blockchain for real estate transactions makes property management easier and prevents contingencies like reversing records.
Several experts underline that by making use of blockchain for real estate, property-related transactions can become as simple as typical online shopping. Blockchain technology enables property records and escrows to be completed, and monies to be orderly distributed without any need of attorneys or company titles.
In addition to having a great impact on individual property sales and purchase, blockchain essentially has the capacity to change and evolve the way people invest in the real estate market. By choosing to tokenize a property on the blockchain, the developers can do away with the need for acquiring traditional bank financing and successfully free themselves from the typical sales timeline constraints that are involved in investment property.
As the assets (in this case the properties) are converted into tokens, they are able to offer an authentic ‘stock market’ solution for transferring the asset to a much greater owner base. This tokenization of property has attracted many real estate brokers to blockchain technology, subsequently augmenting the demand of blockchain development companies.
How can blockchain help in combating real estate fraud?
In the case of blockchain real estate projects, the digital ownership of the property, its contracts, and documents are linked to the blockchain directly. This factor makes rental scams, false listings and forged documents almost impossible. All the records presented on a blockchain are transparent, immutable and permanent, and absolutely no one can alter them in any way. Any transactions made in relation to the digital property would be able to be seen by everyone on the network.
How smart contracts impact the real estate industry?
When it comes to the use of blockchain in real estate, smart contracts represent a future where selling and buying properties can be as easy as typical online shopping. Smart contracts are types of transactions or agreements that are absolutely concluded, and their execution is guaranteed with the help of computer protocols, without any need for human intervention.
It is these same protocols that are undertaken to check the legitimacy of a real estate transaction, and no agreement is concluded in case its terms do not adequately meet the already-established standards. Once the requirements of a property transaction are met, the smart contracts execute themselves automatically. They are transparent to everyone present on the relevant network and tend to be permanent and immutable. This element of blockchain makes even commercial real estate and rental property transactions safer and simpler. By choosing to apply smart contract and blockchain technologies in their real estate processes, investors can expect great returns with absolute minimal risk of fraud.
Paras Kale
Blockchain enthusiast. Expertise in the area of blockchain and web technologies. Experience in smart contracts, DApps, smart contract audits, and web applications development. Director of software development company and working on blockchain technology, especially in Hyperledger, Ethereum smart contracts, distributed ledger technologies, DApp development and also web, mobile applications, AI and big data. Website Email