The Blockchain Revolution Facing Real Estate

Purchasing a home is a fundamental pillar of the American dream, but in the modern real estate market, it can prove to be a nightmare. Constant roadblocks, astronomically high fees, and massive amounts of upfront capital are all capable reasons to make any sane person shy away at the thought of buying a new home.

This doesn’t change the fact, however, that by 2025, Millennials are expected to form up to 20 million new households in the U.S. and a solution needs to be found fast. But one serious player that can challenge this reality is blockchain technology.

The same technology that makes the exchange of digital assets like cryptocurrencies possible could be applied to similarly change real estate as a whole. The adoption of blockchain technology would allow for properties and houses to be tokenized and traded like the common currency of bitcoin.

It’s hard to find a facet of life now that cryptocurrency doesn’t seem to have a posed solution for, but in the specificity of real estate its technology could revolutionize the industry. Here are some ways that the blockchain could forever change real estate as we know it:

The Blockchain, Explained

Now, the field of cryptocurrency is extremely technical, and can sometimes feel like you need a degree in computer science before wrapping your head around it. But, it can be understood simply as a secure database of receipts.

Every time a transaction is made with blockchain technology, the “receipt” of that transaction is logged, confirmed on a block, and added to a chain of other blocks (hence the name blockchain). With this, all transactions that have ever taken place on that blockchain are stored and confirmed for as long as transactions are occurring.

This receipt proves ownership of the digital asset and lets the owner do what they please with it. The real-estate industry could adopt this mode of purchase confirmation and fundamentally change how the common person trades property.

Benefits of Blockchain Technology Within Real Estate

Many issues face the average buyer in real estate. For one, the marketplace of real estate is very centralized. Using a real estate agent to sell or find a house is almost a necessity in the market and introduces many unnecessary intermediaries in the process. Most technology that is introduced for real estate is to pair those selling with those buying, but this can be taken even further with the ability to use marketplaces online to sell or buy a property through tokenized property assets.

Overall, the decentralization of property transactions would make all transactions transparent and easily accessed upon inspection of the blockchain. This is a welcome concept, as the last major market crash in 2008 shows us the effects of a lack of transparency in the housing industry.

Another common problem solved by the implementation of the blockchain is arguably one of the most important reasons. Cost. Massive amounts of fees and upfront capital go hand in hand with the purchase of property in America. By not only cutting out intermediaries like agents, lawyers, etc. the price of purchasing a home could drop drastically. This would also include inspection costs, taxes, and loan fees. Then, the focus of your capital could go towards something much more useful like paying for cross country moving services to quickly and reliably move your possessions.

Lastly, the ability for a homeowner to quickly sell their property would become a reality. Real estate is notorious for being extremely difficult to liquidate and it’s no wonder why. Many hoops need to be jumped through to sell a home and it can often take months to finalize. With the adoption of blockchain technology in the market, properties can quickly be tokenized and sold on a marketplace designed to pair buyers with sellers. This would expedite the process by a substantial amount.

Overall, there are a multitude of faults within the current real estate market structure. The adoption of blockchain and smart contract technology could greatly benefit the majority of people who need to buy or sell a property without a great deal of trouble. It would also allow for more people as a whole to get involved in the purchasing of real estate through multi-signature purchases of tokens. This means that you could own a fraction of a property without having to purchase the entire thing.

We have experienced many changes in the financial norms over the last five decades. From the adoption of credit cards to the common layman profiting from the stock market, the changes we see today will define the future ahead of us. It is estimated that around 46 million people, or 17% of adults in America, own some sort of cryptocurrency. Knowing this, the possibility of a revolution of blockchains within the real estate industry grows more realistic with every passing day and has the potential to change it for the better.