You may or may not have heard of something called “blockchain” by now. It has had a significant impact on financial services. Cryptocurrencies have had a substantial impact on remittances, payments, and foreign exchange. Not only that, but initial coin offerings (ICOs) have also challenged startup loans, stock investing, and venture capital.
The world of real estate has not gone unchanged by this. Before, high-value assets were rarely exchanged through digital channels. With the introduction of smart contracts in blockchain, these assets can be tokenized and traded the same as cryptocurrencies.
Marketplaces and Platforms
To understand part of the impact of the blockchain on real estate, you need to understand just where and how it works. The blockchain has introduced a way to trade real estate and can even enable trading platforms and online marketplaces to support those transactions in a more comprehensive way.
By tokenizing real estate properties, those assets can then be traded in the same way that stocks can be traded on an exchange. This is a revolutionary ground for the real estate market.
Real estate has been a mostly illiquid asset because it takes time for the sale to conclude. With tokens and cryptocurrencies, they can be readily traded for currencies through an exchange. Just as with tokens, real estate can be sold quickly.
Not having to wait for a buyer who can afford the whole property has changed the game for sellers. It has also dramatically shortened the process of selling real estate, which could take months under traditional methods.
One of the drags about traditional real estate is that there are banks, brokers, and lawyers involved in the process. With the blockchain, however, you can shift or even eliminate the participation of some of these roles.
Being able to trade and buy real estate can be much more fluid, and transactions can happen in a far shorter order. This can change the way the real estate market operates as well as the ups and downs that it undergoes. It would allow for parties with far less capital to get involved.