Transforming The Real Estate Market By Using Blockchain Technology
One of the world’s oldest businesses is about to experience disruption from one of the world’s newest. Buyers, sellers, and renters of real estate are experimenting with blockchain technology to trim burdensome middlemen from the industry.
Precious few real estate transactions proceed directly from the provider to the client. There are typically notaries, agents, lawyers, banks, trusts, and more in the mix. Even relatively simple issues, like renting parking spaces or charging for utility use, involve intermediaries.
While blockchain adoption remains low and the technology largely untested, there are at least two major areas that stand to immediately benefit from blockchain use — repetitive transactions and good old-fashioned liquidity.
Finding a city parking spot is a chore. It involves a lot of mindless driving, checking of signs, and an antiquated payment process. Either a human being or a machine takes your fiat, records that transaction on a paper slip, and then that paper slip tells another human or machine that you are all paid up and free to leave the garage.
Running a parking garage is no picnic, either. Someone has to pay those human beings or service those machines. They need to be filled with paper slips, and someone has to check at the end of the day if the system is running as expected. As anyone who has stood in line to pay for parking after a major sporting event can tell you, one broken machine or lackluster human in the mix can cause a serious bottleneck.
Parking is just one example of a repetitive real estate transaction that could benefit from blockchain automation. This can also be considered for hotel rentals and routine utility payments.
There are now several tokens that are already in play to allow hotel owners to cut management companies out of the mix and rent directly to their customers.
One of the best things about dealing with real estate is its relative stability; the house or lot physically exists in a fixed location. Moreover, it’s tied up in a nearly inscrutable web of legal and regulatory red tape.
Ironically, this is also one of the worst things about real estate. It is by definition an illiquid asset. The process of turning your home into a cup of coffee or concert tickets involves banks, real estate agents, home inspectors, and more.
Moving some or all of the paperwork associated with buying or selling a home onto a blockchain turns a byzantine process into a fairly straightforward transaction. Everyone at every stage of the process has access to the applicable documents, and smart contracts are verified and time-stamped by the blockchain rather than an agent or notary. The fees for all of those steps and services are also drastically reduced.
Introducing blockchain tech into the mix won’t quite make turning houses into money easy. Some may argue that it probably shouldn’t, due to the sums of money and responsibility involved. But blockchain tech has the potential to drastically reduce the time and money spent on the average real estate transaction.
Real estate is one of the big boys. It’s a huge business. This fact has not gone unnoticed by crypto sphere investors. In addition to disrupting the real estate process itself, several cryptocurrencies have the potential to effectively take the real estate behemoth and spread it out over a much wider investor base.
Under the old regime, it took serious capital to invest in real estate. If you couldn’t raise the necessary capital, you could pool your resources in an arrangement like a timeshare.
The established real estate market isn’t going anywhere soon. That’s its biggest selling point. But innovations in blockchain technology are slowly chipping away at the foundation of the modern real estate system. The overall effect seems to be flattening.
Investors with casual amounts of cash can now own a chunk of real estate without involving banks or agents, and those same owners — large and small — can use their properties to generate wealth in an efficient and ongoing manner.
The day might soon come where billionaire real estate tycoons are a thing of the past, replaced largely by community co-ops or similar entities. There’s nothing technically stopping a local union, for example, from owning its physical factory without the complicated legal and financial morass that would normally entail.
Nor is there any barrier to a casual real estate investor hopping into a major project alongside stately banks or dedicated investment firms.