The global real estate market is undergoing a huge blockchain disruption that is changing and improving this huge industry, providing transparency, technology advancements and allowing participation of startups specialized in PropTech.
Blockchain for real estate sector will change the way we do real estate business. We are developing smart contracts, which will enable real estate contracts, escrows, property records (deeds, for example) to be completed and monies distributed without title companies or attorneys. These contracts are often compared to a vending machine concept: You deposit your money, and the machine spits out a product with no human intervention.
In the near future, it may be possible for a homebuyer to buy a home and complete the sale (along with escrow and title insurance) by clicking on a shopping cart on a website. The blockchain will ensure that the buyer gets the title or deed and the seller gets the cash (via a cryptocurrency). The blockchain will also record the title or deed to the appropriate public records, such as a county or similar.
Over time, blockchain adoption can have a broader impact, as it can be linked to public utility services such as smart parking, waste, water, and energy billing, and also enable data-driven city management.
The user-friendly automation of all relevant processes and documentation on a decentralized, blockchain real estate platform could also help by cutting out additional inspection costs, registration and loan fees, as well as property taxes, all enforced by quantifiable smart contracts.
It is also important to note how blockchain uses could potentially revolutionize rental property payments. Cost-efficiency and better decision-making in leasing transactions can be achieved with a shared database, where a whole vertical of stakeholders including owners, tenants and service providers can interact with ownership information, or transaction history in an open, secure way.
There are many barriers to the widespread adoption of blockchain and its related technologies. In order to gain acceptance, all participants need to agree on a consensus protocol, and that is often cumbersome. Processing speed is currently also an issue. Other barriers include regulatory uncertainty, volatility of cryptocurrencies and, most importantly, the accuracy of the databases that underlie blockchain.
Cushman & Wakefield has published a research paper on real estate, blockchain and bitcoin, demonstrating that blockchain technology will be widely adopted in a decade. It anticipates individual applications in the CRE space will develop as the technology matures. Some of the figures and conclusions are shown in this blog.