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In a recent article, Entrepreneur warns that companies "can't afford to ignore cryptocurrencies and blockchain anymore." Why? Because big players like Bitcoin are now valued at more than $9 billion and the collective blockchain marketplace has the power to challenge established financial institutions like banks and government agencies. With blockchain confidence stabilizing and more industries tapping the benefits of secure transactions, even traditional markets like real estate are evaluating the impact.

Is blockchain laying the groundwork for a real estate technology revolution?

Blockchain Basics

What exactly is blockchain? Simply put, it's a way to conduct secure transactions online that protects all parties involved. Consider current transaction methods, where each party keeps its own ledger — digitally or on paper — of transactions and payments. But these ledgers can be lost, stolen or altered, leading to situations where multiple versions of the "truth" of any transaction may exist simultaneously. While relying on intermediary services is one way to validate transactions, doing so slows down the process and can have serious repercussions if the intermediary itself is compromised. 

Blockchain exists as a single, shared digital ledger. All parties involved must agree before any new transaction is added to the ledger, and once added, transactions cannot be altered. Here's how it works: Each transaction is stored in a digital "block." The transaction is connected to the previous block as well as to the next one that occurs. These transactions are then stacked together to create an unbroken "chain" that cannot be altered without notice. And the blockchain is continually updated going forward, meaning that all parties who have ever used the blockchain — not just those involved in the immediate transaction — have a complete and accurate record of past and current transactions.

The result is a distributed ledger record that's continually reconciled, requires all parties' consent to initiate and complete transactions and is secured in a way that confidential information is only shared as required.

The Real Estate Revolution

Historically, real estate is a slow industry to adopt new technology. Transactions occur at a measured pace to ensure that documents are properly signed, money is securely transferred and potential issues of fraud are addressed. Blockchain for real estate technology offers a way to shift this paradigm; as noted by Investopedia, the decentralization of blockchain makes it naturally transparent, reducing the chance of massive market inflation (and subsequent crash). Further, blockchain reduces the need for intermediary partners, in turn cutting out professional fees, commissions and administrative costs. Speed also increases: In standard practice, a real estate transaction payment made by the buyer is typically verified and then held in trust by a financial institution before finally being released to the seller. But since blockchain empowers secure peer-to-peer transactions, money can be deposited instantly into the seller's account and the buyer can quickly take possession of their new home. Mortgage approval speeds would improve, too, since lenders could easily refer to the blockchain for any previous real estate purchase history or defaulted payment details.

Blockchain is already making inroads. As Fast Company notes, land records in the United States are typically held by county courthouses and city halls, and many of these records are still in paper form. Advocates of block-based technology say it could cut costs, improve accuracy and reduce fraud; according to CryptoCoinsNews, the Indian state of Andhra Pradesh is currently working with a tech startup to develop a land registration blockchain that will track property ownership and should significantly reduce fraud. In Dubai, meanwhile, CoinDesk reports that the government's land registrar recently announced plans to record all local real estate transactions on a blockchain, allowing "investors residing in Dubai and around the world to verify property data that is backed by timestamp signatures, enhancing the accuracy of data, the credibility of investment transactions and the transparency and clarity of the market."

Overcoming Obstacles

The transition to blockchain for real estate technology isn't without obstacles. Confidence remains a top concern — given the value of many real estate transactions, both financial institutions and Realtors are still wary when it comes to digital methods, especially those with a track record of variable reliability. There's also the impact to brokers, insurers and other midstream real estate services; as investors gain confidence in blockchain, these services could be significantly cut back or even eliminated. In addition, real estate firms will face compliance issues. While governments are coming around to the idea of secure digital transactions, there's still a significant amount of volatility in the compliance and regulation market, meaning that firms may encounter difficulty making high-value or high-volume transactions over time.

Bottom line? Blockchain is here to stay and as more than just a platform for cryptocurrency. There's a revolution brewing as pressure mounts on real estate technology and professionals to deliver transparent, accurate and timely transactions that favor buyers and sellers, reduce fraud and underpin market foundations. As this revolution unfolds, don't be caught without the guidance of a trusted financial partner who can instill confidence while keeping you up to date.


For commercial real estate information, call your mortgage banker or connect with someone here. For residential real estate, stop by your local branch, or find one here.