Real Estate & Blockchain

After more than a decade, blockchain development stands at the precipice of changing the way the real estate world operates. The ability to secure and streamline transactions with speed and economy is about to take hold. So, how does blockchain work?

In the simplest terms, blockchain is a fully secure, tamper-proof record-keeping system. Every record is stored in a “block” that’s part of a longer chain, and the content of each block has to “agree” with the blocks that come before and after it. If it doesn’t, the whole chain is invalid. There’s no way to hack a block without breaking the chain, so accuracy is guaranteed. For an industry that’s seeing growing rates of fraud, this kind of security could be good news. In 2022, 11,727 people were victims of real estate fraud in the U.S., nearly doubling the damage since 2020..?

Blockchain will also support critical document repositories, storing deeds, leases and other contracts. Its fast, continuous data processing means updates are posted nearly instantly, eliminating the need for manual exchanges of paperwork. Blockchain’s iron-clad recordkeeping is a natural fit for real estate, especially title management. Blockchain eliminates any confusion about who owns a property. It’s an immutable public ledger that provides mathematical certainty of ownership.

Just getting started

With the use of programmed Smart Contracts, you can basically automate many parts of the transaction with complete reliability. For instance, automatically releasing or transferring funds when the right conditions are met, instead of needing a person to manually take the next action.

Blockchain can support much richer kinds of data than are currently available to parties in a real estate transaction. Properties will soon have unique identifiers the same way vehicles do, which will give access to all kinds of historical details.

When you buy a car, the VIN [vehicle identification number] can tell you about its past owners, if it’s been in any accidents, how it’s been serviced etc. With blockchain, you will have the same for a house, so you will know what repairs or renovations had been done, utility costs and so on, instead of relying on what the previous owners choose to say.?

Blockchain will bring efficiency and opportunity in many areas

We are already seeing fractional investment emerging as one of the big domestic and international applications for blockchain. Today, real estate can generally only be bought and sold in complete units, which restricts the number of potential investors who can bring capital to a project. It also puts real estate investment out of reach for most individuals.

With blockchain, you can now tokenize a property and sell micro-portions — like crowdfunding. This lets owners raise capital without having to sell or re-mortgage the whole property and allows a lot more people to make smaller investments. It will democratize the whole industry. A kid with a paper route can become a global real estate investor.

Encryption technology that secures blockchains could also strengthen the privacy of real estate transactions with what’s known as zero-knowledge proofs, for example when someone is applying for a loan or to rent an apartment. Current processes burden landlords and applicants with obtaining extraneous information when all landlords really want to know is if applicants can pay the rent. Blockchain could provide a reliable yes or no without all those details landlords don’t need.?

Blockchain is on the verge of completely changing how the Global Real Estate Sector operates. Is your business ready??

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