In a simple term, blockchain technology is a distributed database. The Blockchain technology records all digital transaction into a de-centralized, secure ledger system, where it creates a “chain” of chronological data without any requirement of verification by the third party. This technology is considered the safest platform for trading and transfers between the two financial parties.
You may have heard the buzzword “blockchain” in various articles. But do you have any idea what is it exactly? And it has been the talk of the town for a while now, but why?
Let’s dive into what blockchain technology is and how it will impact the real estate sector to make them more modern and efficient.
A Quick Overview Of Blockchain
The concept of blockchain technology was introduced by Satoshi Nakamoto in 2008 and then implemented in 2009 for the first time as part of the digital bitcoin currency. By using this technology, bitcoin was the first virtual currency to solve the double spending problem. Ever since the creation of the Bitcoin virtual currency in 2009, Bitcoin blockchain’s size has been continuously growing - reaching approximately 149 gigabytes in size by December 2017. The global blockchain technology really took off in 2017 and is now forecasted to grow to 2.3 billion U.S. dollars by 2021.
Five Ways Blockchain Technology Could Transform Real Estate
Blockchain technology has the potential to transform the real estate business. The new technology is having an impact on the way we do property business in these five key ways:
Also Read: Challenges in Real Estate Industry
Multiple Listing Services (MLS) Property Data
Blockchain technology has the ability to share databases and processes. It brings promising opportunities to make data in real estate, more centralized and accessible. The transaction in the real estate sector goes via the multiple listing services (MLS), which can track what property agents represent which clients, about contracts, listing agreements, appraisals and more.
The given information is decentralized and restricted, it is difficult to access for those people who are not real estate professionals. This technology can overcome these barriers within the multiple listing services (MLS). By providing a secure platform to share data, it is possible to make a shared nationwide database, while offering real-time access to land information direct from the source and enables a more holistic approach.
It is another decentralized and challenging-to-access aspect of the real estate buying/selling process. In most of the cases, title records remain stored at the local level and are usually offline. With this technology, this is going to be changed. The new technology could provide a central title database for the entire nation and instant accessibility of the historical title records. According to Ranjeet Jha, Product Head, clicbrics.com, “showing a property owner’s history and actual cost is the biggest challenge in India and through blockchain technology, we can easily achieve it.”
Faster Disbursal of Home Loans
The blockchain technology can also a great way for faster disbursal of home loans. These days, all banks use a time-taking inspection before they grant applicants a home loan. Using this technology, a unique ID will be provided to individual buyers and sellers, where all their past data will be registered. This would make the task of banks easier, which will ultimately benefit home buyers.
The third area where the blockchain technology can transform the security and efficiency of transactions in real estate. By using this technology, one does not require a trust factor between two parties to conduct property business. Each user will have a unique identity on the blockchain through cryptography, which means financial information of consumer can be shared securely with other parties during the transaction process. One can send funds to another person that won’t release until the transaction is properly completed. This kind of security speeds up the transaction management process.
Majorities of intermediaries make real estate transaction process slow. By using blockchain technology, as public databases, it removes the dependency on such parties to give users the required information. Parties whom you can overpass easily while using the Blockchain technology are –government database operators, title companies, brokers, inspectors, notary publics and escrow companies.
The technology which supports digital currency bitcoin is still in a nascent stage and many countries in the world are still experimenting with it. But when it does, it will legitimatize the government-mandated record of property transactions and improve the complete transparency level in the current system.