For better or worse, blockchain is a “buzzy” technology right now. Financial experts, pundits and journalists have lavished the emerging technology with heaps of attention, thanks mainly to its close association with cryptocurrency.
But, while blockchain might have started its journey in the crypto landscape, its story doesn’t end there. As innovators in several fields are discovering, blockchain technology has wide-reaching potential. In this article, let’s explore a couple of connections between this bleeding-edge technology and the real estate industry. How can blockchain convenience consumers and democratize investment? Take a closer look.
What Is Blockchain Technology?
Let’s begin with a working definition of the term. It would take an entire separate article to parse the fine details of the technology, but here’s a bare-bones description of what we’re discussing, courtesy of IBM:
“Blockchain is a shared, immutable ledger that facilitates the process of recording transactions and tracking assets in a business network.”
The operative terms here are “shared” and “immutable,” qualities that make blockchain unique. “Shared” refers to the technology’s public openness and transparency, while “immutable” refers to blockchain’s tamperproof nature. Essentially, the technology keeps everyone honest while keeping bad-faith fraudsters at bay – eminently relevant to the real estate industry!
Blockchain and Real Estate Contract Management
One of the most significant applications of blockchain in real estate is in contract management. Traditionally, real estate contracts have been subject to tampering, mishandling and/or general human mismanagement. The average real estate transaction involves a tangled network of physical contracts; placing them on the blockchain streamlines the process for consumers and practitioners.
High-profile companies like Nobul are leading the charge in adoption. The real estate digital marketplace, helmed by tech maverick Regan McGee, recently announced that it was launching “a new blockchain specifically designed to record and manage transactions related to four key contracts between the home buyers/sellers and agents that meet through Nobul’s platform.” The news represents another way that the company – and the industry writ large – is leveraging blockchain for consumer-centricity.
Blockchain and Real Estate Tokenization
Perhaps the most exciting blockchain application in real estate is tokenization – sometimes called “fractional ownership.”
Blockchain technology can store countless transactions instantaneously without the need for costly and time-consuming intermediary intervention (i.e., no lawyers, notaries or escrows needed). Therefore, there’s really no limit to how small a transaction can be on the blockchain. An investor who wants to invest five dollars (or the crypto equivalent) in a property can do so effortlessly.
And that’s exactly what people are doing. Rather than saving up a massive down payment to enter the real estate market, small investors use blockchain to invest “tokens” in pool ownership of properties. Whereas real estate investment was once the privilege of high-net-worth individuals, blockchain has effectively democratized the practice.
These are just a couple of examples of how blockchain and real estate intersect. To explore the topic further, look into how blockchain cuts intermediary costs in real estate transactions and how the technology streamlines CRE property management.
These are just a couple of examples of how blockchain and real estate intersect. To explore the topic further, look into how blockchain cuts intermediary costs in real estate transactions and how the technology streamlines CRE property management.
