Implementation of Blockchain in the Property Sector
The property sector is steadily adopting blockchain technology, moved by the promise it holds in transforming property technology (PropTech) operations such as buying, selling, renting, leasing, financing, and management.
One of the successful developments of blockchain is the cryptocurrency, namely bitcoin, which is around for more than a decade. Even though the buzz of Bitcoin waned over the years, it left a lasting impact on businesses and consumers. Bitcoin payment took root in 2013, with people buying houses, villas, and mansions with cryptocurrency. In 2017, a Brooklyn-based rental agency announced a new online payment method using cryptocurrencies like Bitcoin, Litecoin, and Ethereum. Even now, blockchain technology is being leveraged by many real estate firms to distinguish themselves in the tech-savvy world and attract the new generation of clientele.
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Even though cryptocurrency ensures transparency, efficiency, and cost savings, it has its potential drawbacks. Bitcoin is not a liquid asset, and its value is prone to rise and fall within a matter of months. Hence, it becomes necessary for real estate firms to assess costs and benefits before implementing cryptocurrency transactions.
Blockchain is not limited to cryptocurrency. It plays a vital role in data processing, especially in storage, access, and sharing of multiple listing services (MLS) property data. MLS is also used to track representations, contracts, appraisals, and listing agreements. Blockchain enables MLS data to be monitored and shared securely. The applications of blockchain in MLS are mostly limited due to its local storage restrictions.
The evolution of blockchain has also contributed to the development of tokenized assets, which are used to track and transfer property titles. A digital token is assigned to the buyer of a property along with a paper deed to be used as proof of ownership for future transactions. The allocation of a cryptographic identity ensures the secure exchange of financial information. Using tokenized assets for property transfer will not only prevent fraud but will also save time and cost.