Applicability of Bitcoin and Blockchain in Real Estate Industry
Bitcoin and Blockchain
A study was recently released on how bitcoin and blockchain can be applied to the real estate industry, especially in information storage and distribution in the immutable transparent ecosystem.
This study recognizes the main factors behind the great success of bitcoin and other cryptocurrencies.
The blockchain technology has gained a lot of attention in the recent past due to its security and stability, two features that any system longs for.
The peer to peer mechanism of this technology allows for faster transaction processing without any control by a central authority like the government.
The blockchain platforms are very safe for transferring money and assets and can find reliable applicability in the real estate industry.
Real Estate Industry Today
Today, buyers and seller have to go through different phases where they meet their agents separately, the property is put for sale, the buyer looks at the property, and if he likes it, then negotiations begin through the agents as a negotiator.
After accepting the contract, money is put in security with a financial institution.
This process involves several intermediaries in an inconvenient process.
Below are ways how bitcoin and blockchain can transform the real estate industry:
There are so many middlemen in an inconvenient and unclear system, making this process expensive. With bitcoin technology, there will be no more dependency on intermediaries like brokers, government property databases, insurance and property databases, inspectors and appraisers and public notaries. With bitcoin, all these middlemen can be phased out of the chain.
They currently grow and earn from you because they hold information that the buyer does not have access to.
The use of public blockchain allows for distributed database, or it is allowing anyone to record information without any censor and with no need for permission.
This means the information can be accessed by anyone in need. Blockchain will enable every property to have a digital address containing all legal, physical attributes, finance, occupancy, historical transactions and building performance enabling the buyer to make a decision.
The property can then be transferred as easily as sending an email.
2. Fraud prevention
The real estate industry is full of frauds ranging from the minor ones on $500 sub-lease to the largest mortgage lenders who charge a lot of transaction fees. Forging papers is so common it has become a part of the common fabric.
Bitcoin provides an incorruptible system where all information is authenticated from the property owner and details to the availability of funds in the buyer’s account.
There is no chance in the blockchain of forging documents since the unique digital certificate of ownership will be linked directly to one property in the system and made almost impossible to replicate.
This will make it impossible to sell or advertise a property you do not own.
3. Money 2.0
Blockchain and bitcoin currencies are fully software-based from birth. They ride on the programmability of software that enables for instructing it to ensure and distribute itself when certain conditions are met, unlike the dollars that needs humans and banks to achieve all these.
With the multi-signature feature in bitcoin, the landlord and tenant can create an account for storing the deposit to eliminate the common problem of failure by landlords to refund the rent deposit at the end of the tenancy.
With bitcoin, the funds can only be accessed when the two of the three signatures are input.
The third party can be the negotiator, two of the three signatures can be used to access the secured bitcoin funds for spending when there is no issue, or once any case with property damage has been assessed and settled.
Bitcoin can be used more securely, cheaply and quickly in real estate. Bitcoin is resistant to censorship since it is Money 2.0.
Bitcoin is not held in any bank account, but your digital wallet on the smartphone or computer.
4. Smart contracts
The ability to perform smart contracts is essential in blockchain protocols like Ethereum and Bitcoin.
The goal is to reduce the involvement of humans and lengthy verifications of the agreements.
The software is programmed to execute a given action once certain predetermined conditions are fulfilled by both parties with no middleman involved.
The blockchain can also serve as a public history showing the existence of the transaction while at the same time safeguarding the identity and sensitive information of the parties and the contract.
Techniques used in cryptocurrencies like digital signatures and evaluating makes the records irreversible therefore preventing fraud and manipulation of records.
It does not rely on others to follow through on their commitments; it is a self-executing contract.
Blockchain and bitcoin technology also increases transparency for the unbreakable transaction and guaranteed services.