Several blockchain real estate startups have emerged over the last few years. Each intends to disrupt the way property sales work.
So why would blockchain real estate startups show their cards?
Earlier Real estate companies have traditionally benefited from keeping secrets. Secrecy is not profitable anymore, especially when middlemen become redundant. A blockchain network, after all, can reduce risk aversion through a trustless environment. This also facilitates property transactions without the need for trusted third parties. A greater market demand for transparency in the global economy has urged innovation in real estate tokenization. Tokenizing assets makes many processes associated with property transactions faster and at a lower cost. This, in turn, enables greater liquidity in the market.
In order to take out some aspects of property tokenization, it is essential to understand the basics of blockchain technology. Blockchain is an ever-expanding decentralized public ledger. Individual blocks contain data, secured with cryptography that are impossible to change. Moreover, each block will have access to a cryptographic hash of the block prior to it. This includes a timestamp and transactional data. Having a publicly-accessible unchangeable ledger adds transparency to the real estate market.
Through smart contracts, blockchain real estate startups remove trust from the equation as well. In such a risky market where parties might not trust each other, smart contracts greatly reduce risk.Buyers and sellers can streamline the process of a property transaction.
Blockchains prevent any data manipulation once the information is on ledger. As a result, the technology records data permanently and efficiently so that all parties involved can see the history of transactions.
Moreover, blockchains prove very difficult to attack due to their decentralized, distributed nature. All these features encouraged the development of peer-to-peer transactions with cryptocurrency. Though since the advent of cryptocurrency, investors have sought a way of tokenizing other assets. Real estate tokenization is one such example.
Blockchain real estate startups tokenize an asset ensuring that sellers actually own the property and that the buyer has the funds to cover it through cryptographic smart contracts. A blockchain can seamlessly verify all this data instantly, reducing the time and the total cost of the transaction.
Tokenizing a property into cryptocurrency increases the security and viability of the purchase, and opens up a global market. To many, blockchain technology has a clear application in the notoriously opaque real estate market. Several blockchain real estate startups have filled this niche by driving innovative solutions.
Trust is the most essential factor in an organization’s ability to retain support from the investor , customers and other external stakeholders. However, in an increasingly digital world of big data analytics and payment platforms, organizations must fundamentally challenge the way they valuate trust. An understanding of the implications and impact of “trust” technologies such as Blockchain are now a vital component of an organization’s strategy. In simple words, Blockchain technology secures digital transactions through encrypted, decentralized, distributed ledger
As compare to cryptocurrencies (such as bitcoin) Blockchain now has the potential to:
Tom Bill of Knight Frank, real estate expert, said blockchain has the ability to revolutionize the property market due to its ability to increase liquidity rates.
“This could revolutionize the real estate market because it provides 100% liquidity 24/7,”Tom Bill of Knight Frank