Blockchain technology will change the real estate industry

Blockchain and real estate holds the promise of simplifying the process of buying and selling homes, making it more centralized and accessible and, in many cases, cutting out countless extra fees and processes. As well as streamlining processes, blockchain in real estate can reduce fraud and cut costs, like transaction fees. These advantages are set out in a Deloitte report called “Blockchain in Commercial Real Estate: The Future is Here.”

Another advantage is with transparency. With blockchain for real estate sellers and intermediaries (including brokers and lawyers) would each have access to the historical data, relating to a specific property and the commercial real estate market in its entirety. This also circumvents the need to enter the same data in multiple places and multiple times.

There are other benefits as well, according to Roger Smith of Forbes Councils, and some of these need to be thought through by some real estate firms. Early adopters of blockchain could well gain a competitive advantage.

There are three ways, according to Smith, whereby real-estate can benefit from distributed ledger technology. The first of these is with a tighter control of funds. Here blockchain can enable a new method for registering distributions of funds to an investor and lock the value into a token that is fixed to the U.S. dollar. This process would increase security and reduce the amount of work required when distributions are sent. In addition, the process would mean that business bank accounts, which charge a fee, would not be required..

The second area is with liquidity. For some investors, who wish to construct a diversified portfolio, realizing (or liquidizing) assets can be complicated. This can be made easier by registering all such investments in a blockchain. This would allow for a more straightforward exchange of shares between investors.

The third area is with tokens, such as using tokens in exchange for equity, which is something attractive to investors. This has become complicated, however, in the U.S. in light of the news that the Securities and Exchange Commission has begun a probe into firms raising funds through initial coin offerings (selling tokens of a cryptocurrency ahead of its launch).