How Blockchain Technology is Next Big Thing in Real Estate Industry

Have you ever thought about the possibilities of using blockchain technology in real estate India? In fact, there are already several companies that are already using this technology to improve their services.

This article explains what blockchain technology is & how it works, followed by some use cases of blockchain in the real estate industry.

Before we dive into how blockchain works, let’s first define what it is.

Blockchain technology is a distributed ledger system that allows all users to work together on one shared database while maintaining complete privacy and anonymity.

The main difference between traditional databases and blockchains is that they do not have any central point of control or authority. Instead, every user has equal access to the data stored in the blockchain. This means that no single party can change the data without everyone’s approval.

In other words, blockchains are decentralized ledgers where information is recorded across multiple nodes. The nodes communicate with each other to verify transactions and record them in blocks. These blocks are then linked together into chains. Each block contains a timestamp and hash value. Hash values are used to identify the previous block in the chain.

There are two types of blockchains: public and private. Public blockchains are open to anyone who wants to join the network. Private blockchains are only accessible to those who have permission from the owner.

Let’s say you want to invest in a house. You go to your bank and ask if you can use their mortgage calculator. They tell you that you need to fill out some paperwork and submit it to them. Then you pay a fee to get approval.

Once you do, you wait until the lender sends you the final papers. If you agree with the terms, you close the deal and pay off the rest of your debt.

Sounds simple enough right?

Well, it can take more than five minutes to do all of that. That was just for a $50,000 home! Now imagine doing that for thousands of dollars worth of homes.

With a decentralized system like blockchain, things would be much faster and easier. In fact, you wouldn’t even have to pay any fees. Instead, you’d simply sign up for an account on the website of a particular blockchain- powered real estate app. When you choose a property, you’d send money directly to the seller’s address.

There would no longer be a middleman taking his cut. Instead, the funds would flow straight to the seller. After the sale closes, the buyer would receive the title deed. The process would be seamless and easy.

At the end of the day, blockchain eliminates the need for intermediaries which means lower costs and higher efficiency.

While security has always been important, blockchain brings new levels of protection. Because everything is open source, anyone can audit the code. Any errors will immediately show up.

Furthermore, since transactions are permanent, hackers won’t be able to steal money through fraudulent activity. Plus, because blockchain doesn’t rely on third parties, fraudsters will be unable to impersonate users.

Nodes – These nodes store information about transactions.

Smart contracts – This feature enables smart contracts to automatically execute functions based on certain conditions.

Cryptography – Cryptography is used to secure the network.

These features work together to ensure transparency and integrity.

Cryptography

Cryptography is used to protect against hacking. It creates digital signatures that verify authenticity and prevent tampering. Without cryptography, there would be no way to know whether something is authentic or not.

For example, suppose someone wants to forge a document. Using traditional methods, they might create a fake document using Photoshop. However, this could easily be detected by comparing the document to other files stored on the server.

On the other hand, with cryptographic techniques, they cannot modify the document without being caught. This makes forgery virtually impossible.

Smart Contracts

Smart contracts are essentially computer programs written into the blockchain itself. They enable the following:

• Automated payments
• Record keeping
• Timestamping

Cryptography

Cryptography is used to protect against hacking. It creates digital signatures that verify authenticity and prevent tampering. Without cryptography, there would be no way to know whether something is authentic or not.

For example, suppose someone wants to forge a document. Using traditional methods, they might create a fake document using Photoshop. However, this could easily be detected by comparing the document to other files stored on the server.

On the other hand, with cryptographic techniques, they cannot modify the document without being caught. This makes forgery virtually impossible.

There are already several companies offering blockchain-based solutions for the real estate industry. Here are three examples:

1) Blockonomics

Blockonomics is an online marketplace that provides everything from loan origination to property management. The platform integrates with multiple software providers including Zillow, Trulia, and Redfin. By using blockchain, the company aims to provide better services to both borrowers and lenders.

2) REcoin

REcoin offers a blockchain-based escrow service. It helps buyers and sellers complete transactions without ever having to worry about fraud.

3) OpenLaw

OpenLaw specializes in providing legal services through its open source platform. It uses blockchain to record contracts and agreements. These documents are accessible to anyone who needs to review them.

There are many reasons why businesses should consider using blockchain technology. Let us look at a few of these reasons.

1) Improved Efficiency

Another advantage of using blockchain technology is that it reduces the time required to perform tasks. For example, when a property listing is added to the blockchain, it is automatically verified by all users of the network. If any errors occur during the verification process, they are instantly visible to all parties.

2) Better Transparency

Since all parties involved in the transaction are able to see everything that happens, there is no room for fraud. All transactions are clearly documented and traceable.

3) Increased Security

One of the biggest advantages of using blockchain technology is its security. Since the entire process is transparent, nothing can be hidden from view. As such, hackers cannot steal personal information or make illegal changes to the records.

4) Reduced Costs

Using blockchain technology also reduces costs because all data is stored electronically rather than physically. This makes it easier to track and manage.

5) Accessibility

Anyone can join the blockchain network. There is no restriction to which companies can use this technology. In fact, it is even possible to create your own cryptocurrency and use it as a payment method.

6) No Middlemen

A major benefit of using blockchain technology is the elimination of middlemen. With no third-party involvement, you will save a lot of time and money.

7) Faster Transactions

Blockchain technology allows for faster transactions. It takes less than a second to add a new property to the system.

8) Easy to Maintain

Since all data is stored online, there is no need for costly IT departments. Also, there is no need for constant maintenance because the blockchain network itself updates the records regularly.

9) Scalability

Unlike other databases, blockchain technology does not get overwhelmed by large amounts of data. Because each record has a unique ID, the database can handle an infinite amount of data without slowing down.

10) No Single Point Of Failure

Like traditional databases, blockchain networks are vulnerable to hacking attacks. However, unlike traditional databases, these hacks do not affect the whole network. The only thing that gets affected is the hacker’s account.

11) More Control Over Data

Because there is no centralized authority, you have full control over how your data is managed. You can decide what information you want to share and with whom.

12) Immutable Records

Once something is written into the blockchain, it cannot be deleted or altered. This makes it very difficult to tamper with the records.

13) Increased Privacy

With blockchain technology, you maintain complete privacy. Unlike other databases, you do not have to worry about who can view your personal information.

Nowadays, many companies are looking for ways to improve their operations using blockchain technology. Below are some examples of how blockchain can revolutionize different aspects of real estate business.

Real Estate Transactions

One of the most obvious applications of blockchain is real estate transactions. Since there is no need for a third party to oversee the process, real estate transactions can happen instantly and securely.

For instance, you could use blockchain to create a digital land registry, which would make property ownership more transparent. You could also use blockchain to track title deeds and transfers.

Property Management

Property management is another area where blockchain technology can be applied. A good example is the company named Propy. It was founded in 2014 and its goal is to develop a decentralized property management platform.

It allows people who rent out properties to connect with other tenants. This way, tenants can find each other and share information about maintenance issues, repairs, and any other problems.

Propy works on the principle of “smart contracts”. Whenever something changes in a property, the owner gets notified via email. He or she can then update the contract and send it to all parties.

Propy is not limited to managing single properties. It also helps manage entire apartment buildings. Realtors and investors can use the app to search for available properties. Each property has a unique QR code. When someone wants to rent or invest in a property, they scan the code using their smartphone camera.

Once scanned, the user enters his or her contact details and selects the type of investment or rental agreement desired. Upon confirming these details, the user generates a tokenized asset. This represents ownership rights over the property.

The asset can be traded among different users. A user can even sell his or her tokenized asset back to the original owner. Tokens are created by a process called minting. They represent ownership in the form of smart contracts.

Minting is done through a combination of mining and staking. Users stake tokens to generate new ones. This creates a self-regulating system that prevents inflation. In fact, there is no need for a central authority since everything happens automatically. Users can earn more tokens by referring friends and family members.

Smart Contracts in Real Estate

Another application of blockchain technology is smart contracts. These allow buyers and sellers to agree on terms without the need for lawyers

For example, if a real estate agent sells a house, the buyer pays the seller directly. The two parties can sign off on this arrangement using a smart contract. In such cases, the buyer sends the seller a digital currency like Ethereum. The seller accepts the currency and signs the contract.

The buyer then transfers the money to the seller’s account. After which, both parties get access to the funds. There are many ways to implement smart contracts in real estate transactions.

For instance, one company called Immutable offers a cloud-based solution. They claim that their software can help agents create an automated escrow service. Immutable says that this would eliminate the need for third-party intermediaries. Instead, buyers and sellers could work together directly.

However, the company doesn’t specify how exactly this would work. Also, the company hasn’t released pricing info. Other companies offer similar services.

One example is smartcontracts.com. Their site claims that their platform will automate almost every aspect of real estate transactions. The company says that it can handle legal documents, payments, title searches, inspections, etc.

With smart contracts, you don’t have to pay upfront fees for anything. You only pay when you close the deal. The company says its system reduces paperwork and costs. It also allows you to track each transaction.

Although blockchain technology isn’t widely used yet, it does seem to be gaining traction. One reason why people believe that it could revolutionize real estate is because of the way it handles data storage.

Unlike other databases, blockchain stores information in blocks. Each block contains a timestamp as well as records related to previous blocks. These blocks are linked together so they form a chain.

Each time a new block gets added, older blocks become obsolete. As a result, old data becomes less relevant. Data stored on a blockchain cannot be altered. That means all records are immutable.

A good use case for this is in real estate. Imagine a situation where the seller wants to change the price of the home. Since blockchain doesn’t store any historical data, the new number won’t affect past deals.

Furthermore, the seller can’t backtrack and say that the current price was always correct.If someone tries to cheat, the blockchain will show proof that they tried to manipulate the numbers. This makes it much harder for scammers to commit fraud.

Another benefit of blockchain is security. Because it uses cryptography, the data stored on a blockchain is highly secure. Even if hackers manage to gain access to some private keys, they wouldn’t be able to alter or delete sensitive information.

Additionally, blockchain networks are decentralized. This means there’s no single point of failure. As long as the network itself stays up and running, users will still be able to access their data.

Blockchains are considered more secure than traditional databases. That’s because they rely on encryption instead of passwords. In addition, they aren’t controlled by any central authority.

All these factors make them ideal for storing sensitive data like financial statements or medical records.

But one thing we know about blockchain is that it’s very disruptive. We expect it to completely transform many industries over the next few years.