Real estate has recently been valued at over USD 280 trillion globally, surpassing the aggregate value of all stocks, bonds, and securitized debt. Three and a half times global GDP is held in reserve in this vast pool of riches.
Every transaction on any given network is recorded in a blockchain. They are then “chained” together to form larger deals. In addition to being extremely difficult to hack or defraud, Forbes notes that “because no single authority controls the nodes,” it is virtually hard to change transactions registered in a public blockchain.
Blockchain technology has the potential to revolutionize the processes involved in buying and selling real estate.
How Blockchain Technology is Transforming the Real Estate Industry?
1) New Trading Methods for Assets
On trading platforms and internet marketplaces, blockchain technology will make real estate transactions more efficient, safe, and transparent.
2) Limited proprietary rights
Financing real estate is easier with the blockchain’s partial ownership capability. Investors can also pool funds to buy more prominent properties. It is required to buy and sell tokens using a trading software. They could avoid maintenance and leasing if they owned both buildings.
This type of asset is difficult, if not impossible, to trade quickly. A commercial property transaction can take months to complete. Tokenization is one solution. This value can be converted to tokens using smart contracts on the blockchain. They can then be easily sold on the secondary market, with full ownership rights included. One token may be worth one square meter or one percent of an object’s assessed value. Investors on a budget can now invest in the stock market with ease.
4) Smart Contracts
A single version of reality could establish trust rather than the current complicated process that requires each party to raise the price of a property by their own fee. Mortgage lenders can make faster credit decisions when your identity is stored on a blockchain. So, once the money is transferred to the agent, the mortgage lender retains the property and begins repayment according to the agreed-upon terms of the agreement. The ownership transfer can be automated because the transaction is recorded on a blockchain and shared among participants.
5) Security of Data
Data security is critical as big data and smart cities grow. A fast network is also required for IoT devices and smart buildings. Blockchain technology may help to secure data by using a decentralized database for peer-to-peer data transfers. It’s like buying with Bitcoin, but with building data instead of cash.
There have been previous real estate transactions utilizing blockchain technology; however, this is the first time in the United States that the ownership of a real estate asset has been coined as an NFT and then sold on the blockchain.
After an auction on Propy, a property marketplace based on blockchain technology, on February 10, 2022, an NFT property was acquired. Ether was used to buy the Florida mansion for $653,163 in Ether, and a digital representation of physical real estate ownership was created on the blockchain as an NFT.
How Impactful will Blockchain bring to the Global Real Estate?