How blockchain can help the real estate industry?

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.