The Future of Cryptocurrency in Real Estate is NOW!
You might not fully understand it, but you’ve most likely heard of blockchain by now. It will be changing the way many industries operate, including commercial real estate. Blockchain is a type of database for storing and recording transactions, and because of the unique security features and ease of use, it will be utilized in many different areas as the technology becomes more widely adopted. There are currently over 1,500 types of cryptocurrency, such as bitcoin, that use blockchain to track transactions and those have been getting a lot of press lately. However, blockchain will also be used by real estate companies, healthcare providers, law firms, supply chain companies, banks, and many others.
I had my 13-year-old daughter write a paper on it, she is now almost 16 years old.
Blockchain is a database. Think of a large excel file that any authorized users can access and change, but no one can change without everyone seeing the change and the majority agreeing that the change is legitimate. Thousands, if not millions, of computers, are witnesses to all of the changes to the database and verify that the reported transaction actually occurred. This provides for an ultra-secure database that is virtually impossible to hack.
Many facets of real estate transactions may be affected by the implementation of this technology. To begin with, it will be easier and faster for all the various parties involved in a transaction to interact and receive data from each other. Real estate agents, inspectors, environmental companies, surveyors, bankers, and title companies will be able to see information in real-time and work on their part of the transaction without having to wait for a middle man to send information. This will speed up the time frame for due diligence and make transactions close more quickly. There will be much less paperwork and all records can be stored electronically. Eventually, all title records will be kept on blockchain allowing a central database showing ownership of property, thus eliminating the need for a traditional paper deed and a lengthy title search to be performed on the property. Ownership of property can transfer with a digital token instead of a deed and there will be no question about the authenticity of the owners because the history of all past owners will be present for all to see.
Blockchain could also eliminate the need for escrow. Instead of holding funds while certain conditions are met in a purchase agreement, the funds can be automatically released when those conditions are met. This idea is known as ‘smart contracts and could certainly increase financial security and speed with which transactions are done. With the combination of smart contracts and digital tokens, it may be possible at some point in the future to add real estate to a shopping cart and purchase it online the same way you buy books on Amazon. Because of the ability to see all the important aspects of a property securely and reliably, buyers and their lenders will be able to make much faster decisions on purchases and not need to worry about fraud and clear title.
Blockchain is also being used in the supply chain to help retailers and wholesalers have better access to real-time data and keep inventories lower. This leads to cost savings on goods for consumers as the need for warehouse space decreases. That is the opposite of a trend we are currently seeing in warehousing as e-commerce has been utilizing more and more warehouse space over the past decade
Blockchain is coming and will transform many of our industries over the next few years. It has the ability to enable a national MLS (multiple listing service) that can securely share data, allow for more collaboration and more transparency for buyers and their real estate agents. It won’t happen overnight but look for this technology to revolutionize the way we do business in the coming decade.
Regardless of price point, our team is united in their efforts to support the client, support each other, and get the job done in the best way possible. Paula Higman Real Estate is a unique team of talented and diverse individuals with a passion for success and client satisfaction.
Contact Paula Higman Real Estate today and let us take this journey with you to marketing and selling your home for the best value, to the biggest luxury real estate market out there.
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