Blockchain technology is one of the trending network technologies today. Blockchain is a public, digitized ledger that stores blocks, which are collectively verified lists of data or records. Blockchain technology has been applied in different fields such as the creation of digital cash, commonly called as a cryptocurrency. For the past several years, blockchain technology and cryptocurrency have invaded sectors of the economy, from the financial to real estate industries.
Blockchain technology incorporates an all-virtual, peer-to-peer connection between users that lead to consensus without a facilitation of a centralized authority. In monetary systems all over the world, a central bank regulates monetary transactions in their respective country. However, in cryptocurrency, literally no one has power over the system and only a consensus among the users will verify a transaction.
Blockchain-technological Developments for the Estate Industry
Incorporating blockchain systems in the real estate industry would improve the efficiency for information sharing and security of transactions. These improvements become possible through the application of a transparent information storage and system. As blockchain technology fulfills a decentralized consensus from its users, the information becomes publicly encoded in the system.
Blockchain enables the use of multiple listing services (MLS), smart identity, and smart contracts. This blockchain-enabled MLS allows the user to view property listings of one another, allowing convenience for the parties involved. Moreover, the smart information allows lessees to check the initial transactions on his selected property, and lessors to monitor the background of the lessee.
Through smart contracts, the technology allows transactions to proceed without the need for a third party as terms of agreements become encrypted into the system. These virtual features satisfy the need for better transparency and efficiency which benefit the industry as listings become easily accessible internationally while reducing operational or transaction costs.
In connection with blockchain technology, cryptocurrency also has the capability to ease up transactions. Cryptocurrencies ensure that payment for estate properties can be transferred in a peer-to-peer basis through cryptocurrency exchange. With this, long-distance and quick payments become more convenient.
Future of Virtual Real Estate
Blockchain technology has already been incorporated in real estate marketplaces through an incentive mechanism. This system enables convenience and fast service to users through a blockchain ledger that allows instant and online transactions. Payment of transactions becomes possible with the use of cryptocurrency. An example of an estate marketplace that innovates in such a way is Propy.
Propy is an international real estate marketplace that incorporates blockchain technology to its platform through an incentive mechanism. While the system incorporates blockchain technology, it still provides listings that can be paid through regular cash. The system boasts of its ability to provide convenient and fast service to users through a blockchain ledger that enables instant and online transactions. In addition, there are also companies, like CPROP, that assist estate services agents in facilitating worldwide deals through offering service-based solutions with the help of blockchain technology and token systems.
Altogether, the system becomes possible with PRO tokens - a form of cryptocurrency. Another similar system is the CPROP that assists estate services agents to facilitate worldwide deals through blockchain technology and its own token system. Specifically, the system offers service-based solutions that aim to reduce the issues of trust, inefficiency, and other probable risks of the estate industry.
Although these features look promising to the industry, there are still uncertainties with regards to how industry players should act in accordance with this trend. Given that everything can be done virtually digitally, commissions for brokers can be affected. Cryptocurrencies also fluctuate heavily, and potential losses for tokenized properties can crop up. The shift to a blockchain-based system also requires the abolishing of the firms' current system which would entail very high initial costs. Its complexity and lack of centralized regulation prompt parties to be wary of the system, explaining the lack of widespread use for blockchain technology.
Amidst all these, Matthew Murphy, Global Vice President at Renren, noted that real estate agents who want to be ahead of the race shall start to apply cryptocurrency system in preparation for the future. His advice consisted of allowing cryptocurrency payment for properties, even if not all, to at least gradually incorporate the blockchain technology.