Crypto currencies sound like modern day zombies taking over the world after tweets of influential entrepreneurs. Most cryptocurrencies use blockchain technology to record transactions. For example, the bitcoin network and Ethereum network are both based on blockchain.
But can cryptocurrencies and blockchain technology be used in our daily lives or are they just another fad?
In this article, we will be discussing how cryptocurrencies and blockchain technology be used in real estate and are there any essential benefits.
What is Blockchain?
Blockchain is a system of recording information in a way that makes it very difficult or impossible to change, hack, or cheat the system.
A blockchain is basically a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems present on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs, a record of that transaction is added to every participant’s ledger. This decentralized database managed by multiple participants is called Distributed Ledger Technology (DLT).
Blockchain is a type of Distributed Ledger Technology (DLT) in which transactions are recorded with an immutable cryptographic signature called a hash.
Also Read: What is Escrow and How does it work?
Can blockchain be used in real estate?
Let’s consider Bitcoin as an example of cryptocurrency powered by blockchain technology. Bitcoin is the leading and most popular cryptocurrency amongst all.
Today, bitcoins can be used for all kinds of transactions including online purchases, mode of investment, all other kinds of payments, etc.
And yes, Bitcoins and other cryptocurrencies can also be accepted as payment methods for real estate sales.
But are there any benefits of using blockchain technology in real estate or are they only being used as an alternative payment method?
Benefits of Blockchain in Real Estate
- It provides a streamlined process for transactions
- It removes intermediaries and the affiliated costs
- It has created a trusted and secure system
- It decreases the span of the deal for faster liquidity
- It allows the fractionalization or the division of owner equity into pieces that can be bought individually
But are there only advantages of Blockchain technology in real estate or are there any underlying cons as well?
Disadvantages of Blockchain in Real Estate?
- The number of sellers accepting blockchain technology is still relatively small.
- Uncertain value appreciation of cryptocurrencies
- Complicated tax situation due to unregulated processes
- Cashing out has to be done at the right time
- Constant challenges with ever upgrading technologies.
While there are multiple pros of using blockchain technology, it also comes with its own cons. Hence, if we can limit the cons, blockchain can prove to be a revolution in the real estate market.