Most assume that when talking about blockchain, it’s immediately followed up by a pitch about bitcoin, ethereum or another buzzworthy cryptocurrency. While yes, blockchain became a noteworthy word on the coattails of cryptocurrencies, the infrastructure has much wider applications than just digital currency.
When it comes to the fine print associated with real estate transactions, without a lawyer, clear understanding of the commercial sector, or an advisor, it can be difficult to cover all the gaps and ensure that all your bases are covered without investing a large portion of time and money. In today’s technological age, the current case by case nature of contracts can seem ineffective. Enter smart contracts, a blockchain-based logic system to expedite the process while maintaining the nuanced nature.
As Luke Feldman and Christian Harden explain, “Smart Contracts are computer programs that put the provisions of a contract in the form of code, and then distribute them across the blockchain ledger. These contracts use if-then statements to automate actions such as: if the tenant occupies the space, then the digital wallet will transfer rent from the tenant to the landlord on a certain date.” As obvious as this new approach seems, it has been a slower shift as new startups and companies adopt cryptocurrency methodology and apply it to real estate.
Paperwork, in general, seems to define the real estate sector. Along the same lines as smart contracts, digital titles could become a more effective approach to tracking a property and the associated information typically mentioned in a physical property title. The perk though is that it’s more readily accessible and largely tamper-proof. As described in the Wall Street Journal, “A blockchain-based digital identity of a property may include its history, location and title details. Usually, buyers and banks can potentially rely on this digital identity of the property for title assessment, as any change to existing data would have to occur through a consensus across several blockchain nodes.”
Property Search Engines
A lot of multiple listing services (MLSs) have become increasingly unreliable as properties remain listed after being sold or taken off the market. In addition, some listing services are limited to a select audience. Blockchain sets to change that by offering a more reliable and relevant property search engine system. As described in Deloitte’s Blockchain in Commercial Real Estate report, “A blockchain-based MLS would enable data to be distributed across a peer-to-peer network in a manner that allows brokers to have more control over their data, along with increased trust, as listings would be more freely accessible,” making it a win-win for both sellers, buyers and brokers alike.
While many can be skeptical of change and disruptions, especially technology related ones, we also need to recognize the potential benefits and exciting new opportunities these changes can provide.