How Blockchain & Crypto Will Transform Real Estate: Part 1

Blockchain technology offers an efficient and secure way to perform complicated real estate transactions. Blockchain increases trust and accountability, accelerating contractual processes and reducing costs through digitizing and simplifying property purchases.

Blockchain minimizes the costs incurred from third parties by removing the need for the paperwork that is indigenous to buying a house. And because buyers/sellers and investors can tokenize assets and convert assets promptly, blockchain is favorably viewed as a platform to facilitate real estate transactions.

Blockchain offers possibilities which will alter the future of the real estate market, changing the foundation of the industry by making its power available to everyone through structured and trustworthy exchanges.

Blockchain is a virtual decentralized database stored on multiple servers that records transactions made in Bitcoin or another cryptocurrency. If one server updates, there is a systemic update on all servers. Transactions are updated in real time, and can never be altered or deleted.

Blockchain is a secure series of ledgers that contain cryptocurrency transaction records that are shared by all verified users. A “block” in the chain collects and groups data until that block reaches its storage limit, and then it is chained to the previously filled block.

The “chain” composed by the blocks creates a verifiable digital transaction ledger that is encrypted and distributed across a vast network of computer systems (also known as “nodes”), acting as an advanced and secure escrow that cannot be changed or altered in any way.

Blockchain technology and cryptocurrency function as part of the same system, containing both non-fungible and fungible tokens. A sale using crypto via blockchain results in the creation of a token possessing all asset/property deed data.

Real estate documents such as titles, deeds, and other certificates of ownership can be stored via blockchain, abolishing the need for tangible property paperwork. This speeds up the sale and purchase process, while increasing the level of trust between parties over a safe and secure network.

Cryptocurrency has long been associated with speculation and profiteering, but in reality, cryptocurrency directly impacts the real estate industry. The adoption of this digital technology is generating major structural shifts that are fundamentally changing how home markets operate.

Cryptocurrencies such as Bitcoin, Ethereum, Litecoin, and Tether (just to name a few, since there are over 6,700 kinds of crypto) function as a secured currency with its own set of codes via a decentralized (owned by those that use it) blockchain platform to facilitate transactions.

Cryptocurrency used for communications and transactions via blockchain are encrypted, ensuring asset security and immutability. Like a traditional checking bank account, users hold crypto in digital wallets allowing deposits, transfers, and payments.

Without blockchain, there is no cryptocurrency. The data stored on blockchains for various cryptocurrencies provides value verification, transaction recording, and value conversion (USD to Bitcoin rate) management.

Bought and sold like assets on the stock market, cryptocurrency is becoming increasingly popular as a direct payment system because users can buy and sell services and solutions without a third-party centralized bank.

Investors can turn property into encrypted digital assets through tokenization containing ownership documentation such as transactional, equity and mortgage history. The asset can be divided into many parts, so multiple users can own a part of the token.

We have established that transferring documentation and funds between CRE financial institutions can take days for confirmation. Cryptocurrency provides faster confirmations of transactions. Blockchain technology eliminates many fees, streamlining the payment or purchase process, generating more revenue.

So, because crypto transactions are done digitally, confirmation happens quickly. For instance, a contemporary issue during an asset acquisition or real estate closing is making sure money is transferred so the proper ownership and/or title can be transferred. Crypto allows the confirmation to be built into the transfer of the funds.

This means the transaction is validated quickly, and can proceed without delay or third parties who formerly had to validate the asset and/or funds moving from one party to the other. The use of crypto and the ensuing real time confirmations will have an immense effect on the operations of the CRE industry.

With stabilized CRE operations and markets, crypto will also lower the risk involved with processes and transactions.  Blockchain’s inherent system of trust makes it ideal for property purchases and sales.

Because the world has become digitally interconnected, there is a need to minimize risk and reduce vulnerabilities. Using crypto via blockchain technology is currently viewed as a solution to mitigate potential compromises that undermine real estate operations and profit margins.

This adds confidence that CRE industry sales processes will expand in the future, and overall risk profiles will lead to further positive development and expansion.

Leveraging cryptocurrency via blockchain removes all geographical restrictions for real estate operations. Asset tokenization also eliminates any location-related constraints.

Since crypto possesses the ability to cross borders between countries and regions, a completely new dimension unfolds, possessing huge opportunities in many CRE industries for different types of ventures.

Before the rise of cryptocurrency via blockchain, only accredited agents, contractors, and certain institutional investors had access to most profitable projects and resources. But now asset owners and developers can market their projects, services, and solutions globally.

Therefore, the adoption of cryptocurrency will stabilize challenged real estate markets rapidly due to the absence of procedural difficulties and inefficiencies which constantly jeopardize current property revenue models, projections, and investor reports.

That’s why blockchain is important for the CRE industry. Using cryptocurrency can foster an environment conducive to existing and new real estate activity, leading to more robust markets on every scale.

Like the internet, blockchain real estate applications will become a fundamental system to revolutionize the housing sector and the way real estate business is conducted in the future, providing greater opportunity through efficiency and security.

Blockchain technology and the adoption of cryptocurrency on a global scale will disrupt and radically change how investors develop, purchase, own, and invest in commercial real estate.

It is only just beginning.

As part one of a continuing series, we are just getting started. Stay tuned to learn more.