The idea that blockchain could do more for different industries aside from cryptocurrencies is still a relatively new concept. Most people still have no idea what they are, mainly because cryptocurrencies are not ubiquitous all over the world yet. Many expect that to happen in the future. Moreover, the use of blockchains might become a vital tool for education, business, standard banking, and more.
When it comes to real estate, some interesting technological trends are bound to develop this year. We are talking about Cloud-based management, Big Data, AR & VR, Automation, and of course, blockchain.
All businesses are exploring how all of these options could benefit everyone in the long run. In blockchain’s case, it can mean amazing things such as public records of transactions, faster exchanges that could get rid of the middlemen, and more transparency so that people are in charge of their own destiny.
It’s a fantastic opportunity for this industry, and we’re here to explain all the benefits so that you can understand more about blockchains, which might become the go-to technology for many other things in the future.
WHAT IS BLOCKCHAIN?
Before we can get into the benefits for a particular industry, we have to understand the concept. As of now, only people who are involved in cryptocurrencies, the technology sector, and other well-read folks are familiar with it. But don’t stress because it’s not that hard to understand.
As the name suggests, it’s a chain of blocks, or records, that are joined together thanks to cryptography. Cryptography is a way to protect data from third parties. Therefore, these records are protected but visible. Each of them contains certain information, a timestamp, and transaction details.
EXAMPLES TO BETTER UNDERSTAND BLOCKCHAIN
Think about your bank account online. Your account contains every single wire, transfer, or bill that you have ever paid. It also has a number and your name, which distinguishes it from other accounts at the bank. That would be a block. The problem is that most of the accounting we understand today is centralized. All that information is stored on the bank’s server.
Another example is seen in most businesses. Companies typically have software to keep all kinds of information, such as the employees, confidential data, their transactions, and more. What would happen if that software was hacked? Or worse, erased? Would the company have all of that backed up somewhere?
That would take time and money, which most corporations might not be willing to spend.
That’s where blockchain could help. Once a block is added to the chain, it’s almost impossible to change. Every single new transaction gets added as a new block with its own identifying number, which is called a hash. So, there could be many previous blocks that contain the original information.
To change that, you would have to go back many blocks and change the hash, but just that action creates another block. It becomes an almost unstoppable cycle.
So, applied to the world of banking, if someone tried to hack your account to steal your money, a new block would be created. But, the previous ones would show the original information. To cover their tracks, they would have to change all of those, increasing the “chain” and adding more work for themselves.
So, here we have a technology that could make sure that our transactions stayed safe despite third-party malice. Where do we sign up?
THE SOLUTION FOR REAL ESTATE
Now that we have a better understanding of the concept, we can start to detail how it would change the world of real estate in the future, starting from 2020.
Don’t worry if you still have trouble with the idea because the following examples will help clear things up.
Real estate is not just about buying a house or renting a space for your store. It’s a trillion-dollar industry that requires paperwork, legalities, permits, payments to several parties, detailed accounting, and many other actions. These things have not been automated yet. Some need several people to do it, but blockchain could help reduce that labor significantly and efficiently.
The vital areas in Real Estate that could improve thanks to blockchain are:
1. TITLES AND DEEDS:
When you purchase any kind of property, you get a piece of paper that proves that you are the owner. You have to keep that paper safe in your house. Some government offices or departments might have a copy, and many have probably been digitized.
But, all of this could disappear in a fire or with a simple hack to the government server. Therefore, blockchain could create a ledger to replace the paper trail. It would keep track of the documents on a secure platform. Additionally, other parties could see it across the world. There would be very little room for error.
If you need a document to prove your ownership, it would be easily accessible, at your fingertips at any moment. In fact, Ethereum already shows ownership records. Meanwhile, Sweden has already adopted the technology for its land registry authority, Lantmäteriet.
This is another concept that’s important for blockchain. It is the process of using an identification symbol, or token so that sensitive data is hidden but still available. The token itself has no value, but it leads to relevant information. In simpler terms, it’s a way to protect your payment details.
A real-world example would be your Amazon account. Once you enter the details of your card, the site created a token so that third-parties cannot see that information. That way, it’s completely safe, and you don’t have to enter your card number every time you want to buy something.
In terms of Real Estate, tokens can be made so that transfers are handled under specific rules. You can control where the money goes and how.
But, there are other, more exciting possibilities. Using tokens would make exchanging assets faster and cheaper. It will also permit the management of dividends, as well as more corporate transactions, in an almost risk-free manner. Therefore, investors would have more options in the end.
3. INVESTMENT FUNDS AND ASSETS
Now, if real estate funds are tokenized, the overhead cost could significantly decrease, and there will be more room for innovative business models. There would be more liquidity and availability of assets. When it comes to shared properties, tokens can easily handle who has access to them.
Smart contracts can now be found on the Ethereum blockchain, which makes things so much more efficient. The sale process will go faster, as well as the payments for both parties, including the Real Estate agent. Additionally, everything done in a Real Estate operation would have a traceable backup on the ledger. Furthermore, all the transactions and sales fees could be controlled in the same space and cataloged.
With everything from payments to ownership being listed on the chain, all other paperwork will be much easier. When it comes time for financial statements, balancing accounts, income statements, etc. you might set all that up to be audited in real-time. This allows individuals, investors, and companies better control of what’s happening with their books. And once again, we have to mention that it reduces human error.
If our identities are recorded through blockchain, it could change our lives in many industries. Basically, a ledger could show what properties you own, as well as other details about it, such as insurance, credits, mortgage payments, etc. These things could be publicly accessible so that you know who you are working with during a transaction.
For example, if you want to buy something from a person you just met, you could – theoretically – see everything regarding that property thanks to this technology.
If you want to know if a new tenant would be suitable for your new apartment building, you could check their credit history, jobs, and possibly more information.
The idea is to bring all this information together in one space to maximize efficiency, security, transparency, and more. Imagine all your essential documents in one spot that could never disappear. It sounds like magic, right?
So, blockchains are records of all kinds of details that could be specified for different kinds of data. With that in mind, it looks like we will see this kind of “magic” sooner than we expect.
Blockchains could potentially be created for our identities. From there, records of everything we have ever done in our lives could be updated. Things no one would be able to erase without some complicated work.
Regarding our investments in Real Estate, we would be up-to-date and up-to-code in a more straightforward manner. Some of us don’t even know what government department to visit if we want a copy to the deed of the house. It could mean no more hiring lawyers or notaries for paperwork.
Technology has made our lives much more comfortable already, but that doesn’t mean that this is it. The possibilities are now endless. Our accounting, purchases, transactions, payments, investing, dealing, negotiating, and accessing could be smarter.
And all industries are taking notice.
This is the future.
Jesús Cedeño is a doctor turned cryptocurrency and blockchain enthusiast who loves sharing his thoughts on cryptocoinsociety.com to help simply crypto in order to make it more accessible to the masses.