If you’re closely following the investment trends over the years, you’ve probably heard of “cryptocurrency” and “blockchain”. Both terms require advanced technical knowledge to understand, which is why the average age of a bitcoin investor is still 33 years old despite its 300% growth spurt in 2020.
To help you understand blockchain technology, we attempt to define and explain it in the simplest terms.
What is blockchain technology?
The first blockchain was conceptualized in 2008 by an unknown man who went by the pseudonym Satoshi Nakamoto, who implemented the design as an essential component of the cryptocurrency bitcoin. Basically, the blockchain is the public ledger for all bitcoin transactions.
By design, a blockchain is made up of blocks, where each contains a cryptographic hash —a unique string of letters and numbers generated via an algorithmic function—of the previous block, a timestamp, and transaction data. These are all connected to a chain, which is the public database.
Since there is no central authority to oversee the whole network, every information is publicized in the blockchain. However, because each block stores information about the block that came before them, there’s no way to falsify the data. If a hacker wants to tamper with a particular record, he’d have to modify the blocks that came before it as well. Because of this complex technology, the blockchain network is one of the most, if not the most, secure monetary system in the world.
Given how blockchain technology has disrupted financial services across several industries, it’s high time we learn how it is transforming the real estate market as well.
Blockchain in real estate
Because of its highly secure properties, blockchain technology has become a highly appealing option when transacting with high-value assets such as houses and properties. It holds a lot of potential -so much so that smart contracts in blockchain platforms can now replace face-to-face transactions, eliminating the need to meet and engage with various entities.
Purchasing property using cryptocurrency is already happening. By tokenizing a property, the need for traditional bank financing is eliminated and both seller and buyer are freed from the timeline constraints, along with other bank-related concerns.
Some countries have also launched pilot projects to test whether it’s possible to transfer real estate transactions and even processes such as title registration intro distributed ledgers that can be accessed online and through mobile apps.
All these technological advancements lead to one pressing question: would blockchain technology eventually eliminate the need for a real estate agent? Of course not!
As with practitioners in all industries, adaptation is key in order to survive evolution which is not taking place at a much faster rate. The role of real estate agents is bound to transform to keep up with the times, but nevertheless, retaining a human element is still crucial given the size and complexity of real estate transactions.
For the meantime, what we should focus on is how blockchain can make real estate properties more attainable for more investors, and how it can improve the whole purchasing process by making it faster and easier to follow.
Are you a cryptocurrency investor? What are your thoughts on buying real estate via blockchain technology? Let us know below!