This is a guest post from Michael Zammit with Malta Sotheby’s International Realty featuring thoughts and musings from the real estate industry brought to you by AgentDrive. How blockchain will impact residential and commercial real estate.
In today’s modern world, we are experiencing many technological advancements that none of us have ever dreamed of in the past. From hi-tech gadgets to the fast-paced world of the internet, we have been reaping the benefits of these improvements.
Perhaps one of the most notable changes we see today is the existence of blockchain. Over the past year, this technology, which supports cryptocurrencies like Bitcoin, has been gaining traction exponentially.
In fact, it has already infiltrated many businesses — one of which is the real estate industry. In Malta, for instance, a real estate agency can now offer this innovative method to their clients.
From a massive increase in efficiency to lower transaction cost, blockchain technology is expected to alter the real estate industry we used to know.
What is blockchain?
For beginners, blockchain is basically an incorruptible digital ledger of economic transactions and cryptocurrency. This technology records not just financial matter but virtually everything with value. It has the potential to eradicate huge amounts of record-keeping and poised to change IT in so many ways.
As for its security, blockchain is pretty much well-protected. It has a large number of computers connected to the network that guards any malicious transactions. Those who are adding to the blockchain must solve a mathematical proof, which will then be shared with all the connected computers. All must agree on the provided solution before allowing the transaction to pass through, thus making it consensus-driven.
While it’s true that there are multiple computers connected to the network, no single entity is allowed to take control of the information recorded on the blockchain.
To give you a better understanding here’s some useful information on how this technology can impact various industries, particularly residential and commercial real estate in the future.
Multiple listing services
It is normal for a real estate transaction to go through the process of multiple listing services (MLS). This particular sector is responsible for leasing agreements, contracts, appraisals and other essential deals in the industry. Given the amount of information it handles, it is prone to inaccuracies, which often affects the agents or investors’ ability to make precise comparisons.
But blockchain technology is expected to put an end to this issue. With a digitized and distributed record, it’s easier to secure and share accurate data nationwide. It can even provide real-time information directly from the source.
With blockchain, it is now possible to create, authenticate, and audit leasing contracts in real-time. This can be done with the help of smart-contracts. This process can automate various aspects of lease agreements, operations, and cash flows. For instance, a smart-contract has the ability to take payment once all the instructions were met. It will not only make the procedure convenient, but it will also provide transparency to both parties.
Aside from that, blockchain can be useful to speed up pre-lease due diligence by efficiently verifying identities and background checks.
Title record process
Another potential of blockchain technology in the real estate industry is the improved title record process. Traditionally, processing land titles are time-consuming, especially since it’s paper-driven and mostly done offline.
But with blockchain’s ability to create secure digital identities and data, the lengthy process of recording and transferring titles will dramatically decrease.
Real estate trust
Blockchain also has the potential to ease the difficulties of liquidizing assets. Usually, it takes investors a long time before they can withdraw their investments from a particular real estate position. However, by incorporating blockchain technology, particularly token offering, real estate firms can efficiently address the issue.
Real estate is also prone to fraud. In fact, there were many reported cases of fraud that has an adverse effect on the industry as a whole. Such cases include forging essential documents, such as bank statements, driver’s license, deeds, and more.
Fortunately, blockchain can now efficiently solve these issues. With the right technology and added security features, fraud in real estate can be easily prevented.
Is Malta the next blockchain hub?
With its huge number of uses and potential to change the world, more people are encouraged to ditch the traditional way and shift to blockchain. Malta, in particular, is considered one of the growing number of countries who started to enjoy its many benefits.
There are several factors why this small, island country is considered the next blockchain hub. For one, its location is ideal for both residential and business purposes. From having ideal weather almost all year round to friendly and English-speaking locals, it’s the perfect place to settle in.
The country is also known for its innovation. For years, Malta has been taking necessary steps to stay ahead of the game in terms of advancements, thus making it a perfect place for blockchain technology. In fact, it has always been welcoming to digital industries. The government even drafted bills that aim to create a legal framework for blockchain technology and cryptocurrencies.
With its promising potential, Malta is determined to become the Blockchain Island in the soonest time possible.
Blockchain is just the beginning of the future, particularly in the real estate industry. There are tons of other usages that this technology can offer. You just have to be open-minded in order to enjoy its full benefits. After all, we are now living in a world where technology is dominant, and almost everything is done digitally.