The Benefits of Real Estate on the Blockchain

According to a survey report from World Economic Forum, 57.9% of 800+ executives and experts in the ICT industry believe this will happen:  “10% of global GDP will be stored on blockchain technology by 2025.” If we take this information and put it on the global GDP in 2020, blockchain technology would have held around USD8.5 trillion. This amount will be way larger for future years because we had the outbreak of the COVID-19 pandemic in 2020.

We cannot deny the potential of the blockchain over time. Instead of restricting it, we choose to use them to our advantage to make the real estate industry better, smarter and wiser.

Source: Freepik @nostagrams

3 Benefits of Real Estate on the Blockchain

Here are 3 of the benefits property owners, investors and tenants can reap from this:

#1: Increased Efficiency

Before blockchain came in, a real estate transaction required the submission of countless documents and communication between parties. It was a time-consuming, redundant and complicated process.

However, smart contracts introduced by blockchain technology may combine many of these activities into a single, simplified sequence of events. 

Each part of the real estate process, for example, loan payment history, may be included in the "code" of a contract, or a block, which can then be built upon to form a chain. When one step of the transaction is completed, all parties involved are alerted that the next phase has commenced. It is all executed in real-time.

Overall, it promotes a smoother, risk-free, errorless, and more efficient procedure for completing real estate transactions.

#2: Increased Transparency

The second benefit of fractionalized real estate is its transparency.

Real estate on the blockchain has substantially increased the transparency of ownership and transactions. Security tokens allow token owners or investors to have their personal information, ownership records, and legal agreements embedded directly into the digital asset they hold. 

The immutability of the blockchain also makes sure the ownership record is secure. This increases the degree of transparency and guarantees that all parties engaging in a transaction are aware of who they're doing business with to prevent any potential criminal activities.

Source: Freepik@nostagrams

#3: Better Compliance

Blockchain technology was created with security in mind. Any manipulation is very easy to detect since data and information are recorded in blocks and connected to a distributed ledger. Those doing due diligence and financial evaluations for potential purchasers may find bolstering security particularly appealing.

Additionally, according to data from Redfin, the typical commission on a real estate transaction is between 5% and 6%. Blockchain technology might help to eliminate the need for a middleman in the real estate industry. Buyers and sellers would get more value for their money if middlemen are eliminated since they will save on commissions and fees charged by these intermediaries. 

This also reduces the amount of back-and-forth between these intermediates, which speeds up the process and levels up better compliance for any parties.

Conclusion

Real estate on the blockchain will eventually become a norm over time. The digitalization of financial instruments in the fractionalized real estate industry increases efficiency, transparency and provides better compliance for the property owners and investors. 

These advantages show that blockchain holds the possibility of a future no one can foresee.