Blockchain in Real Estate

Blockchain in Real Estate
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April 29, 2021

The Real Estate sector plays a huge role in the economic development of a country. The more robust a country's land management system is, the greater its effect on a country's GDP. Therefore, a reliable, cost-effective, timely, open, and secure system is required. However, every country's land management and real estate market seems to be seriously deficient at the moment.

Blockchain is transforming industries around the world, whether in healthcare, pharmaceuticals, fintech, or food. Another sector that can now be added to that list is real estate. Blockchain technology can significantly improve the real estate sector. A blockchain-enabled decentralized approach can help in the elimination of the industry's obsolete practices. Every year, new real estate companies find new ways to incorporate blockchain into their existing practices, saving time and money for homebuyers and sellers all over the world. Below listed are some of the use cases for blockchain in real estate.

Decentralized Digitized Records

The blockchain protocol works on a decentralized framework. In a blockchain network information is not stored in a centralized server but multiple servers across a distributed network.

Despite the technological advancements, in most countries, paper-based land records are still in use. These papers being stored in centralized locations can be damaged by environmental factors at any time. This demands them to be digitized and stored in a decentralized framework such as blockchain. Blockchain’s decentralization feature ensures that there is no loss or manipulation of records as it is stored in a shared network. If the records are ever lost or tampered with, they can always be retrieved from another server/location.

Blockchain smart contracts in real estate

Wikipedia defines a smart contract as a computer program or a transaction protocol that is intended to automatically execute, control, or document legally relevant events and actions according to the terms of a contract or an agreement. In real estate blockchain helps ease the whole buying and selling process. Smart contract automates the process, as the transaction gets stored in a blockchain which can be viewed by any party involved in the process. The entire property management process, from issuing rental contracts to managing profitability to requesting maintenance, can also be carried out safely using a single decentralized network powered by blockchain-based smart contracts.

Tokenization of Properties

Like gold and stocks, real estate has always had a strong footing in the investment market. But unlike them, real estate investment demands a sizable chunk of money. So someone thought of dividing the properties and selling them in fractions, but then there is no basis of trust between the buyer and seller that whether he or she will receive the equity they are entitled to. Here is when ‘Property Tokenization’ came into the picture, which provided a  secure blockchain-based platform to divide the property into tokens among multiple stakeholders. 

With blockchain’s credibility, each of the stakeholders is sure to receive their share depending upon the investment they have made. This helps both the buyers and the sellers. Buyers don’t need to have a large sum of money saved up in order to make an investment in real estate. While the sellers can generate an extra stream of income with the sale of shares and at the same time retain the ownership of the whole plot of land.

Blockchain in Real Estate
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