Blockchain in focus: Real Estate and Property
With bitcoin and cryptocurrencies currently making the news on a regular basis, blockchain – the technology behind them – is becoming more and more prevalent with companies across the world adopting this disruptive technology to improve their business systems. We recently explained how the technology works and in our latest series of blogs we now consider how certain industries can be disrupted by blockchain technology and how companies can implement this technology. In the first of this series partner Jim Truscott takes a look at how blockchain technology is disrupting the real estate and property industries.
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Blockchain-based real estate is not a completely new idea. With companies in America and Asia growing over the last couple of years through their use of blockchain technology and with more and more companies adopting elements of blockchain technology, these businesses are now also becoming prominent in the UK and Europe.
The fit between real estate and blockchain is an obvious one: the real estate industry is one that is built on trust and the blockchain provides more transparency to customers, landlords and the supply chain through the use of Distributed Ledger Technology (DLT). Furthermore, blockchain technology massively streamlines the contract process which ultimately saves both time and money for the real estate company.
What is DLT?
World Bank describes distributed ledgers as “using independent computers (referred to as nodes) to record, share and syncronise transactions in their respective electronic ledgers (instead of keeping data centralised as in a traditional ledger). Blockchain organises data into blocks, which are chained together in an append only mode.”
The terms blockchain and DLT are often used interchangeably and the main benefit of the technology is that it allows every person or entity involved in a transaction to know with certainty what is going on, what has happened and when it happened.
This system marries perfectly with the needs of real estate businesses as it increases the transparency for all parties whilst also reducing the risk of human error, as any work or progress can be immediately validated by the other parties. It also vastly improves efficacy as there no need for intermediaries to validate work and as the work can be monitored in real-time and as it is completely digital, it de-risks the possibility of delays.
How is being used?
Blockchain is already being used by real estate businesses for everything from managing the supply chain to improving customer communication during the rental or purchase. However, the technology is also being used to drive innovation right across the commercial and residential property spaces with the ledger-backed software improving payment processes, smart contracts being used to complete deals virtually and virtual currencies being used to allow investors to buy fractional interests in properties.
If you’re interested in how this technology can be used to improve your real estate or property business then get in touch today. We’re here to help.