The Future of Real Estate & Blockchain
Bitcoin, Ethereum, LiteCoin, and countless other cryptocurrencies have gained massive popularity over the last year, but what is the technology behind these cryptocurrencies? The technology is known as blockchain, the “Digital Gold” of technology. It allows digital information to be distributed but not copied and this single element, the ‘blockchain,’ not only could be the backbone of a new internet but has the potential to impact almost every facet of our lives.
An application to Real Estate?
The real estate industry is ready for innovation and is worth over $217 trillion globally. People have always owned or rented properties, but they rarely have had custody or control over the information associated with them — photos, floor plans, property data, historical data, inspections, 3D models, etc. There are many businesses out there that are controlling and accessing this information for free. Imagine if there was a way to digitally manage this information to mirror the physical world. Information related to a property is always owned by the owner and owners should have the right to share this information to relevant property agents, Real Estate Partners such as limited partners in commercial real estate, renters, businesses and applications that add direct value to their lives. Validated users, high quality information, decentralized control, transparency, and security are the new pillars of technology that the real estate sector can certainly benefit from.
Financial Transactions Application
Through blockchain we can imagine a world where every office rental payment can be verified with a click of a button. You can always have access to a verified accurate history of a property and its financial background, giving you transparency and peace of mind. “In the Secondary Market for Commercial Real Estate, blockchain technology could also have the potential to deliver highly efficient investment valuations using anonymized, comparable data. Complex, independent property valuations could become the exception rather than the norm, with elaborate financial due diligence and valuation procedures being replaced by a simple blockchain ledger.” The fact that blockchain can cut down on transaction costs and provide a preserved history of properties presents a theory that it can eventually deliver gains to property values in the future and as a result, should be implemented into real estate as soon as possible.
The figure below shows a basic visual outline of how blockchain technology works.