New Kid On The Block: How Property Can Benefit from Blockchain Technology

When blockchain technology first hit mainstream awareness through cryptocurrencies like bitcoin and ethereum, a lot of people had their misgivings. Over time however, the many potential benefits derived from the blockchain—the technology that powers cryptocurrencies—is proving that it’s definitely more than a buzzy trend. 

To the unfamiliar, a blockchain is an online digital ledger that enables the storage and management of transaction records in, as its name suggests, a block. Every time a transaction occurs, the ledger creates another block that is time-stamped and verified by the entire blockchain network. Information stored on the blockchain cannot be changed or modified, making it an immutable network of digital transactions.

Use cases of blockchain technology are steadily gaining traction across all industries where trust and transparency are almost always the major factors in every transaction. The security, accessibility, and open-source features of blockchain technology are now being seen for its potential to eliminate tedious red tape and exorbitant commission rates charged by greedy middlemen, and significantly simplify the whole process in any marketplace—including real estate.

The possibilities of blockchain cleaning up and streamlining the real estate industry are endless. Here’s why:

Investors get real time information

The availability of transparent information allows for faster and more efficient transactions. Imagine being able to access a database that is verified, authenticated, impossible to change, and ever moving forward? 

For novice investors, it may be a little more difficult to obtain, verify, and analyze information on listings. As every transaction on the blockchain is only possible with updated information, it can provide investors with real time information and authentication of properties, which allows investors to better assess their investments with information straight from the source. With blockchain, title records are safely and centrally stored, and properties can instantly be transferred to buyers without the tedious process of paperwork. 

It cuts out the middleman

There are plenty of middlemen involved in real estate, and they add to the fees and charges that pile up with every transaction before one is able to call a property his own. Since the information that investors need are centralized, and each transaction is verified, secured and recorded on the blockchain, the likelihood of still utilizing middlemen to authenticate transactions becomes unnecessary. And because there is a lesser need to go through such traditional third-party intermediaries as brokers, bankers, and lawyers to verify critical information, utilizing the blockchain can actually result in significant savings for investors.

There’s ease of transactions

Trust is an essential factor in every transaction, but no longer required when utilizing blockchains where every user and asset are assigned a unique identity through cryptography. As the digital ledger records a user’s verified information and transactions, and cannot be modified, this enables buyers and sellers to transact faster. There’s more ease in doing business, as well as security knowing that the information the ledger holds on both the property and seller sides are valid. This effectively reduces the probability of theft and fraud. 

Currently, there are platforms available that operate on blockchain that offer ease of transaction and opportunities to both buyers and sellers. The ATLANT blockchain, for example, offers Tokenized Properties, enabling properties to be broken down into “tokens” that buyers are free to purchase, creating an orderly trade market and offering the opportunity for fractional ownership. Another blockchain company, P2P Global Revenues provides a platform for tenants and lessors to transact without the exorbitant fees and commissions from third parties. 

Seamless portfolio management

Adapting real estate targeted blockchain services can eliminate tedious paperwork for investors with a wide portfolio of assets. Since all information is verified and authenticated online through unique user and asset identity, lessors have less to worry about when it comes to dealing with tenants or even selecting tenants.
 
 With the blockchain, there is now the possibility of a more hands-on approach in managing assets more efficiently. Some blockchains feature Smart Contracts applications that will only execute a transaction once the programmed conditions of a contract are met. It cannot be modified or changed, and provides transparent details of a property. 

Applying that into tenancy agreements, as what Smart Tenancy Contract is doing, streamlines the process of renting. This software makes use of a system composed of smart contracts between tenant and lessor with the automatic benefit of transparency for both parties. Lessors may even automatically debit rent from a tenant’s account for more ease of collection, or return their deposit as detailed in the agreed details of their smart contract.

There is no doubt that blockchain technology and all the developing platforms around it are worth looking into for those who are still wary of entering a decentralized market. However, as portfolio management goes, it might be worth a look.