Ever since the anonymous Satoshi Nakamoto created Bitcoin, the world’s first cryptocurrency in 2009, the world of blockchain technology has experienced a phenomenal rise in relevance within the world’s financial markets. With more companies and organizations taking a detour off traditional transactional routes, one may begin to imagine what it means for real estate markets all over the world. This formed the meat of our conversations today at the workstation, where we spoke about the role Bitcoin (and other ALT coins) has to play in today’s real estate climates.
How Does Cryptocurrency Work?
According to explanations offered by PLUM, Cryptocurrency is an exclusively digital currency that uses advanced cryptography for security. It is based on a ledger system that records and makes new transactions on the basis of previous ones, making them accessible to the public, but relatively unfalsifiable. The ledger system is called blockchain, and it has the potential to make an extraordinary impact on the Real Estate industry. These impacts can be seen in changing current trends, the alleviation of existing challenges, as well as a significant threat to security in the industry.
What Benefits Would A Crypto-Influenced Real Estate Industry Bring?
- New Sales Platform: One of the most profound effects of cryptocurrency on real estate is providing a new platform for sales. With cryptocurrency, one can bypass the tedious bank procedures, removing any need for a middleman in the transaction. This helps the buyers and sellers to connect in realtime, speeding up the process for the transactions significantly. The Swedish land registry authority has already started experimenting with blockchain technology in processing land transactions, and this could potentially help to save over 100 million Euros in overhead costs.
- Checks Fraud: By creating a private and fully verifiable digital ID, blockchain technology offers a faster and more reliable proof of payment than a bank’s teller. Digital IDs generated and secured by the blockchain’s ledger can be used for a variety of real estate transactions such as deed transfers and mortgage payments.
- Will Ensure Transparency: Buyers and sellers can instantly, securely store their information, which becomes immediately available for verification by any of the parties in the purchase process. This strikes through the tedious processes of due diligence and prolonged discussions with lawyers and bankers. Properties can also now have their own digital identity and there is a verifiable chain of ownership.
- Encourages Investment: Through fractional ownership schemes, investors can buy and sell fractions of real estate units calculated in tokens. This typically works like how stock markets work, only this time more accessible to a growing generation of money bags who are very much invested in real estate.
Potential Risks Involved:
The biggest inherent risk in using blockchain for any transaction is cyber-security concerns. Assets stored in digital formats are susceptible to hacking. Real estate firms who are going digital have to take extra measures in protecting their digital properties.
Cryptocurrency and blockchain technology is a revolutionary change that has shown the potentials of overriding traditional transactional means. It’s only a matter of time before financial and non-financial institutions all over the world fully adopt this as a valid means of transaction. Crypto will not only make transactions easier, it will improve access to investments and will also ensure a more transparent interaction between parties involved.
Primary Sources: www.engelvoelkers.com, https://plumlending.com.