The concept of blockchain has finally surpassed its dawn. Anyone who closely follows global economics advances and innovation should have grown familiar with the term.
However, not everyone is fully aware of what the technology is, what it is capable of, and how it can be applied to real-life contexts.
In this ‘What the future looks like’ series, we try to take a closer look into how the technology of blockchain will change the face of various industries in years from now, starting with the real estate industry.
After two amazing decades of innovative digital platforms that allow users to search and connect investing opportunities easily from home, the real estate market is now slowly but steadily leaning to a new frontier called blockchain.
It might seem strange how an industry so heavily based on intermediaries can be revolutionized with only a touch of the blockchain. The answer lies in blockchain’s powerful real-time public ledger and full-on databases and processes, which make transactions transparent to both buyers and sellers.
When all relevant processes and documentation are automatically stored and managed on a decentralized blockchain real estate platform, additional inspection costs, registration and loan fees, as well as property taxes will be eliminated since real estate activities can be enforced by smart contracts.
The concept of smart contracts are much like a vending machine: deposit a required amount of money into the machine, and it gives you a product with no human intervention needed. These smart contracts can enable completion of real estate contracts, escrows, property records such as deeds and money distributions without title companies or attorneys.
With smart contracts, properties of all kind could even be liquified, tokenized and traded like stocks on exchanges.
On the one hand, sellers can significantly reduce transaction time and get the money they need more quickly by selling fractions of shares to low-budget real estate investors rather than searching for a big-budget single buyer. On the other hand, investors are also likely to benefit from the blockchain movement since the barrier of entry to real estate investment is much lowered.
As people start to micro-invest and own pieces of properties, ‘property ownership’ and ‘real estate investment’ will be gradually redefined.
The blockchain shared database can also enable owners, tenants and service providers of leasing transactions to interact openly but securely with ownership information and transaction history for better decision-making and cost-efficiency. Property stakeholders could receive rental payments fast and cheap from anywhere in the world.
Without all of the above possibilities, a near future where buying a home or its tokens and complete a sale (along with many other paperwork procedures) by just a click on a website shopping cart is no longer unthinkable. The blockchain will be in charge of all the hard work, from ensuring that the buyer gets the title or deed and the seller receives the cash to recording every information and transactions made to the public records.
In such scenarios, does it mean that real estate professionals will eventually disappear as a result of creative destruction? Probably not.
Their knowledge, advice and field experiences regarding the real estate market would still be capable of adding great value in the selling or investing process of buyers and sellers. The only thing that is set to change is the processing of money and transactions, and that change is already underway.
For now, it is time for professionals to start adapting their current way of doing business to the new and the smart of the blockchain.