Blockchain technology is basically a globally distributed ledger. It helps store, secure and verify digital ledger transactions, agreements, contracts etc by a distributed network. The technology is currently going through a revolution phase and is widely used by almost every major industry.
How blockchain technology functions?
- A set of rules are implemented for verifying the authenticity of the transactions or if the information being submitted is valid
- After verification, each record is secured with cryptographic codes and are bound with one another.
- The record which is being included to the ledger is distributed across several networks around the world.
- Likewise, for every transaction the record is added to the ledger and distributed for every network participant.
Blockchain offers immutability to the users, where transactions once recorded, cannot be altered/ interchanged which provides safety and avoids risk factors. Blockchain technology also offers several other benefits to the users. But, here, let’s focus on what impact it has on the real estate industry.
Blockchain in real estate
The process of converting real estate values into digitized tokens underpinned by the blockchain technology is known as “ Real estate Tokenization” The traditional real estate system is convenient only for investors who are affluent and also the assets are mostly illiquid and take years to become liquidated. But tokenization removes all these hurdles.
By tokenization of assets, the ownership of the real estate property can be divided into several shares which makes it easy for small time investors to participate and hold a share for themselves. Also, tokenization eliminates geographical barriers which paves opportunity for any investor from anyone around the world to hold a share of the property.
Another significant thing that is a huge benefit is the use of smart contracts. The traditional real estate business involves a lot of legal formalities and documentation involving third parties. Whereas, with blockchain based tokenization platforms, comes along smart contracts which helps with automated execution of transactions. Smart contracts is an automated agreement that includes every information of the buyer and seller which is encrypted with security codes. The transactions are verified by the automated computer protocols and the agreement is completed with all terms and conditions met properly considering both the parties. It helps with low risk transactions and within a far lesser time span.
As mentioned before, the traditional real estate business involves middlemen such as brokers, agents etc and they earn their own set of commissions for helping people invest in a real estate property. Whereas, blockchain’s decentralized network, removed third party involvement and helped investors conduct transactions directly between themselves along with smart contracts. This helps in a more efficient, quicker, risk free transaction process.
Thus, the use of blockchain technology into real estate, removes almost every major hurdle faced by the industry and transforms it to a whole new level. It helps customers with a quick, highly secure, efficient, seamless business experience and at lower costs. Blockchain has already influenced the industry majorly, and is expected to make a significant mark in the upcoming years.
Real estate investors are well aware more than ever now that blockchain technology is revolutionizing the industry and is improving the business in a multitude of ways. Blockchain is going to be the future for real estate in no time. So, if you want to attain blockchain based tokenization for your real estate business as well, there is no better time than now. Do it as soon as possible with a well renowned real estate tokenization company, and maximize benefits and profits for your real estate business.