Is Time Enough For Crypto In Real Estate?

[ad_1]

The global cryptocurrency market is worth around $ 2.5 trillion, slightly less than the size of the Indian economy. The amount of wealth crypto has amassed over the years also underscores how popular digital currencies are becoming around the world. Although Bitcoin is the current leader in the virtual currency world with around 42% of the market share, research suggests that there are around 14,500 active cryptocurrencies worldwide.

As we have entered the crypto boom, it is natural for everyone from business owners and tech enthusiasts to real estate developers to think about the potential of digital currency to facilitate real estate transactions.

In recent years, real estate has proactively warmed to the idea of ​​tech, reversing the lingering agnosticism it showed a few years ago. Credit also goes to the multiple iterations of foreclosure that helped spark the digitization of real estate services in the country. Today, real estate leaders are actively investing in cloud-based technologies, AI and ML-based analytics platforms, digital walkthroughs and virtual reality, marketing automation And much more.

Blockchain, the parent technology of cryptocurrency, has shown limited but profound applications in real estate globally. Based on DLT (Distributed Ledger Technologies), the blockchain can offer a transparent crypto platform to facilitate secure and transparent real estate transactions, especially in fractional ownership of commercial assets, rental housing, vacation homes, etc. Through the tokenization of real estate assets, it can also facilitate cross-border transactions.

Blockchain can offer a robust platform to digitize key information related to real estate purchases such as deed history, transaction history, legal documents, technical information, maintenance history, etc. This simplifies an otherwise cumbersome process. In a large and multifaceted industry such as real estate, integrating blockchain will also reduce processing times and offer instant 24/7 validation, further enhancing the authenticity of data.

Crypto Technologies in Global Real Estate

Not only blockchain, but digital currencies are also slowly and gradually gaining ground in the real estate industry. In some international cities, it has been proposed to pay property fees and taxes via digital currencies. Recently, there have been a few large transactions in properties, yachts and luxury goods via crypto.

According to media reports, commercial condos in Manhattan worth $ 29 million are sold exclusively through bitcoin. These properties are listed on BitPay, a bitcoin payment service provider, and can be purchased exclusively using bitcoin. The paid bitcoins will be converted into USD and transferred to the developer’s account. It is claimed that the entire transaction can be closed in a matter of days, in stark contrast to the usual time taken to process these acts, which takes around 60 to 90 days.

Meanwhile, the presence of cryptocurrency is not new to the global real estate industry. In 2019, properties in Iloilo, Philippines were sold using bitcoin and litecoin. The fact that 32% of BitPay’s October revenue comes from luxury property, gold, and yacht transactions further underscores the potential involvement of bitcoins in real estate transactions.

The path to follow

Blockchain and cryptocurrencies could be potential levers to completely rethink real estate transactions. The multiple listing services (MLS) currently prevalent in real estate can be phased out to a DLT-enabled BlockChain platform. This can help create a robust system in which every real estate transaction and rental agreement can be tracked in real time by key stakeholders such as brokers, investors and buyers. It can bring real estate into an era of unprecedented transparency.

Blockchain can also give real estate data analysis a head start. The main categories of data such as historical trends, neighborhood information, price trend analysis, future price projections, etc. can be integrated into the system to provide insightful information to buyers and help them make unbiased and informed decisions. Likewise, it can help with buyer credit checks and enable developers to make safe buying decisions. This can genuinely democratize real estate investments and provide additional levels of security.

However, despite so much inherent strength, reimagining a world where real estate transactions take place in digital currencies such as bitcoin or Ethereum is still overkill. Although we are in the midst of the cryptocurrency hype, some of the weaknesses inherent in digital currencies cannot be overlooked.

Digital currencies do not create any cash flow and their appreciation is mainly subject to speculative forces. They are also prone to hacking attacks and online fraud. Crypto enthusiasts praise the absence of banks and central authorities. Although the absence of regulatory bodies can sometimes be dangerous and provide fertile ground for fraud. So, ultimately, while blockchain-based technologies will see increased participation in the real estate business cycle, we don’t see a wider use of cryptocurrencies in real estate transactions very soon. However, despite these inherent challenges, their limited application in alternative assets such as rental homes, vacation homes, etc. will continue to increase.

Disclaimer: Sahil Kapoor is the National Director of 360 Edge. The opinions expressed in this article are those of the author and do not represent the position of this publication.

Read all the latest news, breaking news and news on the coronavirus here.

[ad_2]