After
bitcoin, Blockchain is considered to be a popularly emerging technology. It has
the ability to streamline several aspects associated with the property
industry, to improve security and accuracy and reduce costs.
About blockchain
Before
getting to know the advantages brought about by blockchain in real estate
sector, it will be useful to know what blockchain is all about! It is stated
to be a broad term that refers to technology to enable updation of encrypted
electronic ledger by multiple parties that work through various consensus
system forms. It effectively means that with every ledger update, ‘state’ is
linked chronologically to a state preceding it, thereby generating an
unchangeable and fixed record of all occurred transactions. Moreover, what is
being recorded within the ledger tends to vary from one system to the other. Bitcoin,
the very first world’s cryptocurrency is considered to be the best known ledger
maintaining blockchain.
Benefits derived by real estate industry by implementing
blockchain
·
Smart contacts: This is an
area where a huge difference has been made by Blockhain by using ‘smart
contacts’, which are computer programs. They allow automatic executions of
business agreements upon meeting specific conditions. Utility or lease pursuant
is an example, where one party needs to pay up an agreed amount to another party,
depending upon specific variables. Automation of payment can be made in similar
fashion with standing instruction of bank paying up the utility bill,
irrespective of the amount at any given month. Making real estate much more
liquid and transparent, it reduces friction of carrying out such transactions.
·
Efficiency and cost saving: Customization
of Blockchain technology is possible to meet group needs using it. Platforms
can be restricted to participant groups having access to ledger via
administrator approval or predefined protocol or open to public. Ledger copy
gets saved on every computer linked to blockchain network, irrespective of the
approach taken. It is also applicable on data placed upon blockchain that is
participant validated through specific consensus model. Trust necessary for
remote transaction without requiring 3rd party intermediary can be
established with validation process.
· Financing: Blockchain can
offer significant advantages to commercial real-estate financing. It
facilitates accurate and prompt document filing and record keeping, beginning
with loan origination. On booking of a loan, borrowers payments, loan activity
and covenant compliance can be tracked by the system. Then to identify defaults
and enforce obligations, to assist with servicing, securitization and
syndications and reduce mortgage servicing costs, smart contacts can be used.
On adoption of blockchain for maintaining land records by the government, developing
on the same can be natural extension for addressing all real estate aspects.
·
Transparency & trust: With
accurate maintenance of property ownership records, conveyance and encumbrance,
blockchain in real estate industry is
able to offer certainty of information to allow grater trust and transparency
level. Every property is now able to have its very own digital address with the
ability to store information pertaining to the property.
This way,
blockhain has been boosting real estate industry immensely.
