Blockchain is rapidly affecting the evolution of digital commerce. Its many applications (cryptocurrency included) have facilitated an explosion of not only new businesses, but established businesses diving into the technology, too. Blockchain technology enables organizations across multiple industries to free up capital flow, provide security and trust, and speed internal processes–all critical components of the global market.
For digital software engineers working in blockchain today, understanding how to strategize, prototype, develop proof of concept, and implement the ledgers can lead to transformative applications across industries like insurance, finance, retail, supply chain, and even real estate.
Innovating Real Estate
In fact, of all the industries above where blockchain has fairly clear-cut application prospects, real estate stands out as particularly ripe for this sort of innovation.
Consider this: historically, both income property owners (apartment or home) and potential tenants require trust to avoid conflict and fraud during the contract process and throughout the life of the lease. To reach a rental agreement, renters and tenants often use a third-party intermediary. A tenant makes decisions based on a number of criteria, including property ratings and available feedback. A landlord makes tenant selections based on the information regarding the rental history of the potential tenant. Tenants then deliver the deposit either to the landlord, which can be insecure, or to a financial institution, which charges handling fees.
The whole process is dated–tied to old-school vetting and handshake agreements, as well as relying on third parties for services. With the number of people who rent versus own in housing markets across the U.S. and the growth of direct-transaction apps, the industry is ready for tools that are both more secure and better able to track the execution of terms of lease agreements.
How Blockchain Delivers for Real Estate
The central feature of blockchain applications in real estate is the ability to track not only end-to-end processes, but also to hold snapshots of history, feedback, and ratings–all while guaranteeing that the information is unaltered. Additionally, the use of smart contracts provides two more benefits: keeping tenant deposits safe without requiring fees and handling execution of the lease agreement while preventing any tampering with the terms.
From a nuts and bolts perspective, blockchain provides a secure relational database to ensure that information about tenants, landlords, properties, and operations are both accurate and accessible. It also utilizes Ethereum(?) for storing snapshots of information like document ID and hashcode and applying them to smart contracts.
The potential for increased transparency and tracking of properties and property history will be realized as an exponential improvement in the ability to quickly execute transactions. It will also allow individuals to buy, sell, or rent properties without the need of a third party as long as they utilize a blockchain-based platform. It can also provide a centralized resource for transaction data and prevent disputes over dated ownership.
A Broader View
The possibilities for blockchain in real estate highlight the overall value propositions for industries ruled by transactional markets: security, data storage, history snapshots, and elimination of third-party service providers that charge handling fees. While other industries are moving strongly in the direction of the adoption of blockchain technology, real estate is a few steps behind. Still, the buzz is real, and for those who dive in early, the value could prove immediately beneficial.