Blockchain technology has evolved by leaps and bounds over time, and the prominence of this technology has further escalated with the advent of cryptocurrency such as Bitcoin. It’s a topic that has become incredibly relevant, with everyone being at least somewhat aware of cryptocurrency and blockchain as a whole. However, this awareness is a double-edged sword – while most people have become aware of the concept of blockchain mainly because of cryptocurrency, the vast majority tend to associate this technology with setups like Bitcoin and Ethereum – among other forms of cryptocurrency – which couldn’t be further away from the truth.
The fact of the matter is that blockchain technology will affect many industries, such as banking, legislature, politics, education, and – an industry that has already been given away by the topic – real estate.
After all, blockchain technology is essentially a database of sorts, allowing people to make a ledger that is not just limited by transactions – any form of data can be securely recorded and stored on the blockchain. This heightened level of security and a comprehensive data record is one of the main reasons why this technology is poised to break through the real estate market as we know it.
One of the major problems plaguing the real estate industry is the fact that there are no liquid assets in this market. This, coupled with unnecessary interference by intermediaries and a lack of transparency when it comes to the transactions in this sector, has further propagated the notion of blockchain technology playing a key role in shaping this industry.
So, it’s time to delve into the details of how blockchain technology will play a key role in maintaining real estate regulations. It allows for the system of tokenised economics to be integrated into the real estate market. What this means is that assets in the real estate sector are tokenised to facilitate its liquidation and streamline the transfer of these assets between the buyer and seller. In a way, one can describe this as turning the real estate market into another form of secure currency that people can invest in if they wish to do so.
The best way to describe this would be to compare real estate asset tokenisation to the stock market – assets that are tokenised are sold in the market in chunks, as opposed to people having to sell off or purchase the entire real estate offering in one go. It’s an action that was, is, and will continue to be a highly arduous task to accomplish – sellers need to find a buyer with substantial funding to take up all their assets in one go, while buyers need to manage their finances and spend in a particular avenue of real estate after considerable deliberation and analysis.
All these hassles are negated with the introduction of tokenised economics, which help enable the following benefits in the real estate market.
Negation of Intermediaries
Generally, the real estate market is full to the brim with unnecessary middlemen, legal paperwork, and numerous listings, among other such pressing issues. With the introduction of tokenised economics, the processes involved in the selling and buying of assets in the real estate market will be streamlined to a substantial extent. This is done through the integration of smart contracts – a system that transparently facilitates transactions without requiring the services of a middleman. It allows you to decide specific regulations which are enforced without the need of any human interference, thereby enabling a level of automation that will play a key role in hastening the processes involved in the real estate industry.
Allows for Liquidity
As we’ve already mentioned before, the real estate market generally faces a problem when it comes to asset liquidity – an issue that is taken care of with tokenisation. It liquidates the assets in the real estate industry by converting them into easily tradeable tokens.
Enables Fractional Ownership
Real estate investment is a costly endeavour, but these barriers to entry can be significantly mitigated with tokenisation. Instead of having to pay a substantial amount of money upfront, investors can pool in their money and purchase real estate tokens to become fractional owners.
Smart contracts and tokenisation economics will play a key role in shaping the real estate regulations of the future, and information mentioned above should be more than enough to indicate the importance of blockchain technology in the real estate industry.