Blockchain is widely associated with one of its applications, cryptocurrencies but this is hardly the only use-case for this technology. Blockchain is essentially a digital ledger where data is stored on a network of computers or so called nodes. The computers on this network check the data systematically, and makes sure it hasn’t been tampered with. A blockchain network inherently brings security and transparency into the system, hence can be used in sectors where there is a lack of those features.
Real estate 2.0
Real estate is the latest among a multitude of industries that are poised to be impacted by blockchain technology. Similar to how many age-old industries that are plagued with inefficiencies, real estate market could also benefit from the advantages inherently to blockchain technology.
Blockchain could enable direct transfer of assets between two parties without the need for a trusted intermediary. There are several other potential benefits to implementing Blockchain technology in real estate, which we’ve covered in detail a previous article.
Briefly blockchain could impact the Real Estate market by
- Eliminating the need for a trusted intermediary
- Facilitating a platform for direct transactions between buyer and seller
- Increasing deal flow and general access to deals
- Eliminating cumbersome formalities and procedures
- Making transactions more secure and transparent
- Eliminating unnecessary costs for administration etc and thus helping both parties save money.
Some of these benefits are either inherent or are programmable into blockchain networks. Some features that could be expected to be available in the future is tokenization of real world assets and facilitating real estate transactions using smart contracts.
Enterprises focus on real world applications
Applications of blockchain is often restricted to cryptocurrencies by entrepreneurs and developers alike but the past few months have witnessed enterprises bringing in ideas that have a real world impact. This trend can be observed in the funding received by startups in real estate, trading and investing sectors. In January 2019, real estate blockchain enterprises have displaced sectors such as Financial services, Fintech and Cryptocurrency and is now ranked second in terms of funds raised.
Funds raised by various sectors in January 2019
Despite the reigning bearish market sentiment, real estate startups raised an impressive $80 million. Only second to trading and investing startups which raised $81 million. Interestingly Canadian startup Chelle coin single handedly raised all $80 million in capital in real estate sector. Of the dozens of startups in real estate sector, Propy has recently achieved an important milestone that could provide a glimpse into the future of real estate transactions.
Propy is a US-based real estate blockchain enterprise and it recently made headlines when it concluded the first residential transaction exclusively on a blockchain platform facilitated by Ethereum smart contracts. According to InWara’s ICO+STO database the company managed to raise ~$13 million during its token sale which concluded in 2017.
Forbes recently published a report pertaining to the details of the property, according to the report the real estate asset sold for approximately $1 million and was facilitated using smart contracts. Natalia Karayaneva, CEO of Propy thinks that despite blockchain’s nascency, it is still an optimal solution to simplify buying real estate easier. Natalia was quoted saying “Over the past two decades, Silicon Valley has become one of the world’s hottest property markets, denoting the perfect example for a market where high levels of trust and transparency throughout the transaction process are paramount.
While still considered a nascent technology, the utilization of blockchain is the optimal trustworthy way of streamlining the lengthy and non-transparent process of buying a home. We look forward to facilitating hundreds more of these transactions in the near future, easing the process of buying a home for all parties involved,” signaling the company’s ambitious plans of initiating a paradigm shift in real estate transactions.
Propy concluded its first property transaction entirely using Bitcoin. This deal in spite of being revolutionary, portrayed the company as being solely into real estate transactions using cryptocurrencies. The company is now trying to educate agents on how buyers can leverage blockchain by releasing a crypto certified agent program which allows agents to become certified in cryptos. Despite these incredible developments, blockchain powered real estate market still has to cross a regulatory minefield before it can become universally adopted.
Then there are who believe Blockchain cannot deliver on all its promises like Farzam Ehsani, co-founder and CEO of VALR.com, a digital asset trading platform. Farzam argues that there will always be a need for a trusted intermediary, to ‘verify’ if a digital token is actually backed by the high-value physical asset as claimed by the token distributors