If you’ve been paying attention to the news over the last few weeks you’ve probably heard about cryptocurrencies, specifically Bitcoin. You may have wondered to yourself or your colleagues, what does this have to do with real estate? As it turns out, quite a bit!
Nigeria’s central bank ordered deposit-taking banks and other financial institutions to immediately close accounts transacting in or operating cryptocurrency exchanges, saying such deals are “prohibited.”
However, it’s not entirely been proven that bitcoin will be a threat to successful real estate transactions, on the contrary, it has so far helped the Real Estate industries in other countries like the United States.
Firstly, one of the most obvious ways that bitcoin is bound to have an impact on the real estate market is by providing new platforms for sales. Bypassing the bank middlemen, buyers and sellers could potentially connect in real-time, speeding up the process for transactions significantly.
The blockchain enables transactions with new online marketplaces or trading platforms like ATLANT, which tokenizes properties to permit asset trading online. Sweden’s land registry authority has been testing ways to record property transactions using this technology, which could theoretically save over €100 million each year by doing away with paperwork for speedier transactions.
Another key benefit of this technology is built into how Bitcoin works, and it could have a far-reaching impact on the real estate industry. The blockchain can be used to prevent fraud by creating a private, fully certifiable digital ID. This offers a more current and reliable proof of funds than a bank’s letter. Digital IDs secured by the blockchain’s digital ledger can be used for deed transfers, mortgage payments, escrow, or other financial scenarios.
Furthermore, by reducing real estate fees and enhancing online security, the blockchain helps encourage investment in real estate. Another way is through fractional ownership. Rather than saving a larger chunk of upfront funds to acquire a property, investors could buy and sell fractions of their real estate tokens instead. This would bring the property market closer in line with how the stock market works.
Also, this digital currency encourages greater transparency in the entire real estate purchasing process. With new online platforms, buyers and sellers can store their information securely and it would be instantly verifiable, which cuts out prolonged discussions with banks and lawyers (and thereby saves money).
Individual properties could have their own digital identity, with a documented and verifiable chain of ownership. As the blockchain is decentralized, this information would be open, accessible, and fully transparent.
Designed to be user-friendly, there’s no need to have the advanced technical knowledge to get a handle on how Bitcoin works. To get started with using it, you simply install a Bitcoin wallet on your mobile phone or computer. You’ll be given an address similar to an email, which you can use to send or receive money. Bitcoin transactions take place in the blockchain, a shared public ledger that supports the network. When you send or receive the currency, your Bitcoin wallet keeps a private key in the form of a small, secret piece of data. This serves as proof that you own the wallet.
