Buying Real Estate With Bitcoin and Cryptocurrency
How Blockchain Technology May Change Real Estate
There is no doubt that Blockchain has had a significant influence on the financial services industry and you will be hard pressed to find a segment of it that has not been impacted by this technology. The use of Cryptocurrencies has strongly impacted currency exchange, remittances and payments of all kinds. There has been the introduction of Initial Coin Offerings (ICO’s) and this has strongly challenged venture capital, the investment in stocks and loans for start-ups.
There has been a significant impact from Blockchain on the Real Estate sector as well. It was unthinkable until recently that making transactions via digital channels was even possible for real estate and other high value assets. Transactions in real estate had always been performed in the “off line” mode through face to face interactions with a number of parties. But this has now been challenged through the use of Blockchain. Blockchain platforms now have smart contracts which allow the tokenization of real estate so that it can be traded like Bitcoin and other cryptocurrencies. The trading of real estate varies in this way. Below are 6 ways that real estate trading could change with Blockchain:
A Different Platform for the Market
Up until now the technology used in real estate has been focussed on the matching sellers to buyers. Blockchain has introduced new ways for real estate to be traded and will be able to establish marketplaces online that offer new ways of real estate trading. By using these new platforms there will be more comprehensive support for real estate transactions. A new company that has just launched an ICO is creating a Blockchain platform to provide transactions for real estate and rental properties. They are called ATLANT. With their tokenization of properties trades can be made similar to buying and selling stocks and everything is done online.
What ATLANT does is it enables people selling property to tokenize it, so that it can be handled similarly to a stock sale, and then using a token sale through the platform the asset can be liquidated. Tokens that are collected are exchangeable for flat currency and if there are a number of buyers then they will all own a percentage of the asset.
No requirement for Intermediaries
Can you imagine a real estate transaction without banks, lawyers and brokers? Blockchain could seriously threaten the roles of these intermediaries in future real estate transactions. The developments in Blockchain mean that platforms will be able to handle the listing of properties, legal documents and payments. With the intermediaries out of the way sellers and buyers will be better off as they will save on commission fees. The real estate process will also be a lot faster as the intermediaries always tend to slow the process down. Those Edmonton homes for sale will be processed very quickly.
Real Estate will be a Liquid Asset
Most people do not consider real estate to be a liquid asset due to the time that it takes to sell it. When real estate becomes tokenized on a Blockchain platform it can be immediately traded for flat currencies. There is no waiting on behalf of the seller for buyers that can purchase the entire property as they can derive value from their property pretty quickly.
Part Ownerships of Property
Blockchain enables fractional ownership and this will assist in lowering the barriers to investing in real estate. In normal circumstances a large initial investment would need to be made to purchase a property. Using Blockchain, investors would have the capability to buy fractions of tokens if they wanted to. Another advantage of this kind of fractional ownership is that they could share burdens on property upkeep such as regular maintenance.
This can have an impact on lending too as the owners of property usually have to use their homes as security for any loans. Owners of property may still be able to use it if the terms are written for them to do this.
Trust through Decentralization
Security and trust in inherent in Blockchain because it uses technology that is decentralized. Only peers on the network have access to stored information on Blockchain which means that it cannot be changed and it is transparent. One of the reasons for the housing bubble crash ten years ago was a lack of transparency and greed on the part of institutions. Peers can verify information so buyers and sellers of real estate will trust the system more and have more confidence in transactions. There will be less attempts at fraud. Arizona and Vermont have passed legislation to make smart contracts admissible records.
Further Cost Reduction
With the transparency from Blockchain other real estate costs can be trimmed. Apart from the intermediary’s fee savings, costs can be saved on loan fees, registration fees, inspections and real estate related taxes. These processes will be automated by Blockchain platforms so the costs will be reduced.
Access to All
At the moment the $217 trillion valued global real estate scene is dominated by big corporations and the wealthy. With the emergence of Blockchain more and more people will have access to the market and they can make transparent transactions which are equitable and secure. The reality of peer to peer real estate transactions is a real possibility soon using Blockchain powered platforms. Edmonton homes for sale could be going peer to peer.
In fact it is already happening. In September 2017 a flat valued at $60,000 in Kiev, Ukraine was transacted via Blockchain technology. The buyer never went to the Ukraine and was able to purchase online with a smart contract and Blockchain.