How Blockchain is Revolutionizing the Real Estate Market

The world of cryptocurrencies is like a roller coaster. You never know where it’s going to take you next. Even with bitcoin’s volatility, it is strongly believed that cryptocurrencies are the future of financial transactions. As cryptocurrencies become more commonplace their ability to be adopted to different industries increases. A distributed ledger system seems like an excellent fit for the real estate industry.

The real advantage in using blockchain within real estate is its decentralized economic model. Cryptocurrencies utilize an immutable ledger that works without expensive credit ledgers acting as a third-party mediator.

Cryptocurrencies have the ability to provide a system that offers secure transactions with a high level of security and trustworthiness. The efficiency and speed at which these transactions occur is also a definite plus. Cryptocurrency projects focus on all aspects of the real estate industry. There are projects geared at rentals, sales, and purchases, home sharing networks, the applications of blockchain in real estate seem endless.

Now, state governments around the world are conducting research on how cryptocurrencies and the smart contract function can improve how property is sold and exchanged. The smart contract function allows pieces of real estate to be tokenized and exchanged like Ethereum or other coins.

The real estate market is distinct in that transactions historically have occurred face-to-face. There’s typically some mediation involved between a buyer, seller, real estate agent, property manager, and so on. These transactions can receive authentication without extra fees. And once a transaction is authenticated to completion, it is there forever. This helps secure the entire process from top to bottom.

The title insurance industry has grown to over $15 billion per year. Apart from this, every dimension of government from county to state has their own method of property data storage. Some are still stuck in the paper age. If property titles were to be decentralized, it would cut immense costs as well as save time. It might even replace the need for the entire industry altogether. Think of like a Carfax for homes. You could even add data relating to the property’s history.

As exciting as this sounds, the reality of the situation prevents this from happening in the near future. The amount of capital and time it would take to convert all property ledger systems to a blockchain one would be significant. It’d be smart to look to corporations and governments working together to develop a system of conversion in which everything will be completed on a decentralized digital system.

Blockchain offers many advantages. It has the ability to bypass the need for a trusted third party to mediate digital transactions. It has the capability to centralize real estate data. This allows us to quickly access and transfer title records.

Cryptocurrencies also offer advantages in the international real estate market. Cryptocurrencies give the buyer a way to remove obstacles relating to international monetary regulation. Government legislature will sometimes restrict the flow of capital. China recently implemented “capital controls” which targeted foreign investment in China. Cryptocurrencies are still somewhat unregulated.

Smart contracts lessen the risk of fraud and the actions of hackers. The decentralized platform on which many cryptocurrencies operate makes ownership transparent. As governments become more comfortable with crypto, adoption will skyrocket.

Cryptocurrencies give the real estate industry the ability to make ownership clear to all. A central authority isn’t needed to verify your ownership of real estate assets.

It’s also become popular for real estate listing sites to accept cryptocurrency as a form of payment. This can appeal to domestic cryptocurrency users as well as international buyers that don’t want to deal with fiat currency exchange. It also signals to buyers that you’re associated with a modern company that’s at the forefront of innovation. Some sellers will even accept split payments between crypto and fiat. Look to the real estate market as holders of crypto may want to convert their currency into a more tangible asset. In addition to selling and buying pieces of property with cryptocurrency, it’s also possible to use it as a form of payment for vacation rentals.

Initial coin offerings also increase the revenue of real estate. Unique tokens are being created so that you can buy, rent, and trade in real estate blockchain without using traditional fiat. This has been shown to be especially attractive to millennial investors. Millennials grew up during the housing crisis and have a deep-rooted fear of the volatility within the housing market. Millennials also live on the edge of technological innovation. Cryptocurrencies further open the real estate market to them by giving them the option of investment through the purchase of digital tokens. This decentralized method of investing allows individuals to buy parts of real estate assets. These digital tokens are a regulated representation of assets like bonds, funds, and equities. Being allowed to buy parts of assets allows for partial ownership.

While this form of investing doesn’t necessarily lead to home ownership, it does open up the market to more financial investment. If these millennials see a positive return on their investment, they will be more likely to pursue more real estate opportunities in the future.

Additionally, owning cryptocurrencies that are tied to tangible assets can potentially lead to a positive financial windfall in other financial industries. This can decrease the cost of living, student loans, all while increasing the capacity for investment.

Cryptocurrencies mean that you’ll be able to sell your shares of property on secondary token exchanges around the world. You have the ability to sell at any time of the day or choose to hold onto your investment.

For example, Indiegogo has partnered with the St. Regis Aspen Resort in Colorado to allow people to use ether and bitcoin in order to purchase partial assets. These micropayments allow properties to reach a larger pool of investors. Traditionally, only those with a high level of income would be investing in ski resort properties. Now, more people can than ever. This Indiegogo offering was made open only to accredited investors, which means only to people that make over $200,000 a year. While many millennials are not earning this type of capital, it’s a significant step forward. Soon after, the maximum allocation for security investment was sold out.

Cryptocurrency tokens are just more attractive to investment from millennials. It’s said that 30% of millennials prefer cryptocurrency investment when compared to traditional stocks and bonds. Not to mention its additional potential. Tokens can be used to invest in luxury goods like boats and supercars. Digital tokens are the future of investing and asset-sharing. As more industries look to make themselves to be more attractive to younger investors, real estate is in an excellent position for future capital growth.

Investing in Real Estate Using Cryptocurrency

There are numerous advantages and disadvantages in investing in real estate using digital tokens. Let’s take a look.

Pros

• Diversification — buying real estate with crypto allows crypto investors to diversify their assets into more traditional holdings.
• Stabilize profits — Buying property allows you to tie your crypto to a more stable asset.
• Negotiating power — Crypto is essentially cash. Cash buyers are always preferred by property sellers.

Cons

• Lack of availability. Sellers accepting cryptocurrency as a form of payment are still uncommon. As it becomes more accepted in the mainstream, more sellers will embrace the movement.

• Cryptocurrency and taxes. What are the taxes involved in paying for real estate using crypto? What are the laws? Well, it’s complicated. Buyers need to be prepared. They should consult a CPA beforehand to ensure that their purchase is completely legal and upheld by national law.

Selling Your Property for Cyptocurrency

Have you thought about selling your property for cryptocurrency? We have too. Here are the pros and cons of selling your home for digital tokens.

Pros

• The potential for significant appreciation. Cryptocurrency appreciates much faster than fiat.
• Cryptocurrency opens your property for sale to a wider audience. A wider audience means more buyers.

Cons

• The same tax complications that set you back as a buyer can also work against you as a seller. Again, consult a CPA when selling your property for crypto.
• The potential for significant depreciation. As above, the potential to help can also hurt. You can deal with some serious losses if you aren’t too careful with your assets.
• It can also be difficult to store your bitcoin securely. While there are many digital wallets available for you out there, new users of crypto may face difficulties in managing their digital money.

Cryptocurrencies also bypass expensive processing fees that typically come with trading real-estate assets. The housing market has so many stakeholders. There are banks, brokers, payment processors, real estate agents, and property managers. Security tokens eliminate the need for all of these parties. This cuts costs. Blockchain essentially removes intermediaries and a lot of the fees associated with them.

Some believe that in ten years the blockchain ledger will be the main source of real estate transactions. Consider this the first quarter of blockchain’s growth in the real estate industry. Just like the web, blockchain is fated to become a constant in our everyday lives to the point where we’ll forget we’re using it. There are already a number of blockchain related projects in the works as we speak. Companies like Rentberry, Atlant, and Bee Token are all trying to do something a little different.

Atlant is attempting to digitize real estate ownership and allow for a P2P rental platform. P2P rentals have the ability to transform the entire property industry. Lessees and landlords will be able to conduct payments and resolve disputes directly with each other on all one platform.

Even though there has been much publicity as to crypto’s volatility, it continues to look to change the world of real estate. There are just too many applications that cryptocurrencies offer to the real estate. These applications all offer a unique set of advantages for buyers, sellers, and investors everywhere.