The COVID-19 pandemic could turn out to be a significant turning point in history. Events as widespread and disruptive as this are rare and present the world with unique opportunities. The world most likely won’t go back to the way it was but will instead move forward.
Blockchain technology had disruptive potential before the pandemic, but its advantages are all the more clear now. COVID could give industries like blockchain-based real estate the push they need to enter the mainstream. Simultaneously, some old concerns are even more pressing now.
Blockchain real estate markets are changing. Here’s a look at five of the most substantial of these shifts.
The most noticeable change taking place in blockchain-based real estate is a general uptick in adoption. COVID-19 highlighted flaws in traditional systems, like privacy concerns and intermediary costs, which blockchain transactions solve. In light of growing cybersecurity concerns and economic hardship, blockchain becomes a more appealing option.
The overall blockchain market now expects a 91% growth by 2023 thanks to new adoption trends. This rise in blockchain coincides with a booming housing market, creating the ideal landscape for blockchain-based real estate.
More people are warming up to the idea of smart contracts and blockchain-secured transactions, and this trend will continue.
It should come as no surprise that as blockchain real estate adoption is rising, so are investments in it. Funding hasn’t exploded, but it is growing, including some notable investors taking an interest in the technology. Venture capitalist Tim Draper, for example, recently invested in Propy, a blockchain-based property selling platform.
Propy isn’t the only blockchain real estate start-up to emerge recently. More small firms are appearing in the space, indicating a widespread belief in the potential of these technologies. With blockchain property tech seeing increased investments, these companies will grow and legitimize the industry.
Not all COVID-era changes in blockchain real estate are continuations of older trends. Before the pandemic, the sector largely focused on tools for people buying and selling homes. Now, consumers looking to purchase properties as investments make up a larger portion of the target market.
In light of recent stock market uncertainty, investors are looking to diversify their portfolios. Investing in real estate is one of the most beneficial ways to diversify, and blockchain-based property companies have capitalized on this. This trend has led to an increased emphasis on tokenization in the real estate market.
It’s difficult to talk about blockchain transactions without mentioning cryptocurrency. While most blockchain real estate transactions today use traditional currency, that’s beginning to change. As mentioned earlier, property tokenization is rising, enabling investors to manage property investments as a cryptocurrency.
Fintech startup Reinno launched a tokenized property investment platform with $237 million in assets this Fall. Tokenization isn’t the only trend fueling crypto’s involvement in real estate, either. In October, PayPal announced cryptocurrency support, which will enable investors to spend crypto like traditional currency.
While blockchain-based real estate is seeing some promising signs, not all developments in the sector are positive. As blockchain technologies have grown, it’s made their lack of regulation more prominent, and for some, worrying. If blockchain real estate skyrockets before regulation, it could create security concerns, and if rules are too strict, it could limit its utility.
The Securities and Exchange Commission (SEC) has encountered issues in regulating blockchains in the past, and this has yet to change. Blockchain’s unclear regulatory status is now more prominent than ever and could hinder its growth. Though blockchain real estate is growing right now, it may hit a wall if the regulatory landscape doesn’t change.
All things considered, the future of the blockchain real estate sector looks bright. The pandemic has accelerated many digital technologies, and that could be the case with blockchain as well. If current trends continue, blockchain real estate could emerge from the pandemic more legitimate than ever.
As with everything during COVID, the long-term effects of these trends is uncertain. Blockchain-based property sales could skyrocket after the pandemic, slow down or remain unchanged. For now, though, signs seem to indicate widespread growth across the sector.