Blockchain in real estate has enhanced the new leaf for this industry. So how does the application of blockchain change real estate trading?
It can not be deniable that blockchain’s influence on every segment of economics, especially financial services. Cryptocurrencies have changed dramatically the business models of payments, remittances, and foreign exchange. Even insurance or supply chain hasn’t escaped blockchain disruption either.
Compared to other industries, the real estate industry seems slow to ultimate the application of blockchain technology. Until 2018, researchers find out the enormous capabilities of benefits of blockchain in real estate. Previously, its transaction with high-value assets was never implemented through digital channels. The smart contracts of blockchain platforms have opened a new way of development in real estate.
However, the awareness about these huge benefits of blockchain in real estate has not arisen due to some misunderstandings.
What is blockchain in real estate?
At its core, a blockchain is exactly a shared and distributed ledger or database. A notable benefit of blockchain technology and security tokens is that it offers a way to sell and buy properties in granular pieces. Transactions are implemented, processed, and bundled in blocks. Then blocks are encrypted and linked in a chain that takes place with a network of nodes.
In that way of recording and combining transactions into a decentralized ledger, a blockchain creates a “chain” of chronological data. There is no party that has control of or can change and each individual transaction is only verified via cryptography. In blockchain platforms, it allows real estate transactions to be tokenized and traded like cryptocurrencies. Next is the deeper analysis of the 5 benefits of blockchain in real estate that you shouldn’t miss.
Accelerate a comprehensive real estate ecosystem
Traditional real estate technologies have typically focused on listings and connecting buyers and sellers. However, blockchain empowers real estate trading by allowing blockchain platforms and online marketplaces to provide more comprehensive support for real estate transactions. Real estate can be tokenized and traded online in almost the same way that equities are traded on a stock exchange.
Eliminate the role of intermediates
The real estate ecosystem has previously included brokers, lawyers, and banks referred to as intermediates. However, blockchain in real estate may soon usher in a change in their roles and participation. Listings, payments, and legal documents are taken over by new blockchain platforms. By eliminating intermediaries, the application of blockchain in real estate allows buyers and sellers to save a huge amount of commissions and fees charged by these intermediaries.
Renew the traditional thought of real estate’s liquidity
Real estate has generally been regarded as an illiquid asset since it takes a long time for sales to accomplish all the processes. This burden is wiped out by cryptocurrencies and tokens, which can theoretically be effortlessly exchanged for fiat money. Real estate, on the other hand, is immediately sold as tokens. A seller does not have to wait for a buyer who can purchase the entire property.
Fractional ownership through a token
Blockchain in real estate investment lowers the obstacles by permitting fractional ownership. In order to obtain property, most ventures need to demand a large sum of money upfront. Alternatively, blockchain enables a group of investors to pool their funds to purchase a larger property. Investors simply use a trading app to sell and buy even fractions of tokens. Furthermore, fractional ownership allows them to avoid the hassles of property management, such as maintenance and leasing.
Transparency and Decentralization of Information
Blockchain is well-known for its trust and security as a decentralized innovation. All the data are stored in a chain that is accessible to all the peers on the platform. This kind of process creates transparency and immutability of the information. Vendors and Purchases are confident in implementing real estate transactions since information is verifiable to all the peers on the network.
Hundreds of trillions of dollars are invested in global real estate each year, but this market is dominated by large enterprises. The application of blockchain in real estate allows more people to access the market. The benefits of blockchain in real estate are making transactions more secure, transparent, and equitable; eliminating all the traditional burdens. Real estate transactions may become truly peer-to-peer in the future with innovative blockchain platforms.
akaChain is backed by FPT Software, a globally leading technology, and IT services provider. It is an end-to-end, permissioned, multi-chain network based on the Hyperledger Fabric. Since its establishment in September 2018, akaChain’s product has assisted many enterprises, from SMEs to Fortune 500 firms, to transform with distributed ledger technology. The company provides a broad range of permissioned blockchain-based products and services in multiple sectors, including retail, supply chain, banking and finance, insurance, shopping mall management, etc. to transform with its distributed ledger technology. For more information, please visit https://blog.akachain.io/
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