What to Know About Blockchain Real Estate Transactions
Blockchain has been disrupting industries around the world, so it should be no surprise to learn that it’s finding a place in real estate too. It’s still possible to take the traditional route of meeting face-to-face with an agent to discuss properties and sale terms, but blockchain is already making its mark. There’s much to learn about this technology and how it operates, so it helps to start with the basics of how blockchain works in real estate investing.
Blockchain vs. Cryptocurrency in Real Estate
Some people confuse blockchain with cryptocurrency, but these terms are not interchangeable. Blockchain is a type of technology. Cryptocurrency is a digital currency that operates using blockchain. This technology works like an unalterable ledger that is accessible to everyone in the world. As such, it’s what’s called a single source of truth. This means all users have access to the same data.
Blockchain Has Already Entered the Real Estate Industry
Blockchain has been around for a while, tracing its roots back to the early 1990s. Since then, the technology has paved the way for automation and other innovations to accelerate digital processing. These innovations are already changing the real estate industry, and you’ve probably already seen some of them.
- Accepting cryptocurrency as payment: Some developers, sellers, and landlords accept digital currencies like Bitcoin, Dogecoin, and Ethereum as payment for their properties.
- Fractional ownership of investment properties: Investors can purchase part of a property and share ownership with several other people. They also share profits collected from rent and appreciation when the building sells in the future.
- Smart contracts: Blockchain makes it possible to create, sign, and review contracts in real-time instead of sending them through fax or mail. This increases transparency, speeds up processing times and improves due diligence.
Benefits of Blockchain in Real Estate
Blockchain technology brings several benefits to the real estate industry. It can eliminate the “middle man” from many transactions, maintain accurate, real-time records, reduce fraud, lower costs, and increase trust between stakeholders.
- Liquidity: Blockchain turns real estate into a liquid asset. Instead of waiting until a sale is complete, sellers can convert property to a token and trade it almost immediately.
- Lower barriers to investing: Fractional ownership lets people begin building a real estate portfolio before they have the funds to purchase property on their own.
- Increased transparency: Since everyone has access to the data, it’s more difficult for parties to commit fraud. Credit checks, title history, and identity verification are easier with blockchain.
- Reduced costs: Using a decentralized network and implementing automation can lower some of the costs associated with real estate transactions.
The Future of Blockchain in Real Estate
Although we’re already seeing the effects of blockchain at work in the real estate industry, this is just the beginning. Implementing blockchain requires changing the way a brokerage operates. However, the promise of increased transparency, speed, and efficiency is compelling.
OpenAiRE: Your Real Estate Investing Partner
At OpenAiRE, our team includes local experts who understand the evolving real estate market in Southern California. Whether you’re buying, selling, or investing in the short-term rental market, put our expertise to work and enjoy the benefits of effortless ownership.