April 29, 2019 – Real estate is the largest asset class in the world, with a whopping $217 trillion total global valuation as of 2016. Safe to say it will play a huge role in the global economy. However, the real estate industry has some serious issues which make it ripe for disruption.
Real Estate Issues
First of all, the barrier to entry is extremely high. Therefore, it’s no surprise that most real estate investors are people who were rich to begin with, since properties require a lot of capital up front.
There’s also a terrible lack of transparency in the real estate business, which allows bad players to commit corruption, tax evasion, and money laundering.
Real estate is also plagued with several fees such as exchange fees, broker fees, attorney fees, etc. And we have the dreaded middlemen to blame, the very thing the crypto industry is trying to disrupt.
The biggest drawback of this industry is the lack of liquidity, i.e. it’s challenging and time-consuming to convert properties to cash. Not to mention the transaction speed is too slow. In general, it can take a year to find a property and fulfill all the requirements needed to acquire it.
For these reasons, blockchain technology can step in and improve the overall industry. A blockchain is simply an immutable ledger that has no authority figure governing it, but instead maintained by a network of computers.
Some notable local blockchain real estate projects include Aqwire and C Estates, which both have practical applications for international real estate.
Blockchain will provide a great deal of transparency and immutability to the real estate industry through the power of smart contracts and tokenization.
Smart contracts are contracts that self-execute when certain conditions are made, removing the need for middlemen. Without these middlemen, investors could save a lot of money. Furthermore, it would speed up the transaction process since the bureaucracy is also eliminated.
By linking the digital ownership of property, contracts, and documents directly on a blockchain, it is nearly impossible to be tampered with. This prevents property fraud.
One of blockchain’s exciting use-case is the tokenization of real-world assets, i.e. digitizing it and storing it on a blockchain. This may sound crazy, but according to the World Economic Forum, 10% of the world’s GDP will be stored in crypto assets.
Tokenization allows fractional ownership of properties, decreasing the barrier to entry and allowing individuals with modest means to participate. And by opening up a whole new class of investors, liquidity dramatically increases. Furthermore, people don’t have to wait forever to sell their property since they can simply liquidate their tokens in an exchange.
This article originally appeared on BitPinas: [Feature] How Blockchain Can Change Real Estate
- A Growing List of Blockchain Jobs in the Philippines
- How to buy Cryptocurrency in the Philippines
- List of Licensed Virtual Currency Exchanges in the Philippines
- List of Cryptocurrency Exchanges in the Philippines
- List of CEZA-Approved Offshore Crypto Exchanges
- List of Cryptocurrency Wallets
- List of Bitcoin Wallets
- List of LoyalCoin Partners
- Philippines Blockchain Business Directory
- List of Philippine Blockchain Events
- Bitcoin to PHP
- Cryptocurrency Charts in Pesos
Notes and Disclaimer:
- If you like what you read here, please consider subscribing to our newsletter!
- Follow Bitpinas at Telegram.
- For press release, sponsored content, and other advertising options, click here.