Cryptocurrency is real estate inclusive. And, yes, this is a positive thing.
Cryptocurrency uses advanced blockchain technology for security. It utilizes a ledger system that records a transaction and uses the history to make the next transaction. The system makes transactions accessible to everyone while guaranteeing investors’ security, as it is reasonably unfalsifiable.
Blockchain technology has the potential to make mega changes in the commercial real estate industry. The changes can influence the existing trend, deal with the industry challenges, and alleviate the threat to security in commercial real estate.
The blockchain-driven innovations in the real estate industry will only get bigger and better and potentially change the way commercial real estate business is done for good.
Better Property Search Procedures
The current searching and leasing procedures in the commercial real estate industry are old school and can greatly benefit from cryptocurrency and blockchain technology. Notably, property brokers, tenants, buyers, and other stakeholders use multiple listing services (MLS) to manage property information. The system faces different challenges, among them being accessibility to users and requiring customers to pay subscription fees. Moreover, the information on properties listed is at the discretion of brokers, and tenants have little or no input. MLS can be inaccurate, incomplete, and prone to manipulation.
By utilizing blockchain-based MLS, data from all listings can be put in a centralized system. With that, any inaccuracies and data manipulation can be eliminated as brokers, homeowners, and tenants have more control over their listings. The system will also translate to improved reliability and trust among stakeholders. Overall, using blockchain technology will improve location address, state of the property, rental fees, lease details, and ownership history.
Eliminates Third Parties
For the longest time, the commercial real estate industry has relied on escrow to complete transactions safely. Escrow companies are third parties in business dealings, and they protect the interest of all parties involved. They handle money and documentation until the transactions are complete and all parties are satisfied. Blockchain technology will help eliminate the need for escrow in CRE and make transactions cheaper and faster.
Cryptocurrency and blockchain technology is based on peer-to-peer systems, where transactions are recorded in real-time on all user’s phones or computers. Essentially, multiple identical records are created for all users, and they cannot be changed or interfered with. In a nutshell, every transaction is public.
Ordinarily, real estate transactions are relatively slow to complete as time is required to update the parties as the transactions unfold. However, with cryptocurrency come automation and all parties involved gets real-time data about the transaction. They can see how their transactions are progressing from any part of the world.
New Investment Vehicles
Cryptocurrency and blockchain technology has the potential of bringing in a new yet exciting investment opportunity to the industry. Traditionally, the stock market offers stocks, bonds, mutual funds, and often, commodities such as gold, silver, and oil are traded.
Cryptocurrency opens up the space for trades to be made of commercial real estate properties. Cryptos such as Digix Gold Tokens have recently joined the market and are being traded. Notice, these cryptos are backed by gold bullions. Similarly, it is possible to conceptualize and eventually liquefy real estate properties into tradable tokens.
Over the years, cryptocurrency has been traded in bits and pieces. For instance, Bitcoin and Ethereum can be traded in small bits called Satoshi ((0.00000001 BTC). CRE can borrow this concept to rake in more investors.
People who do not wish to buy a property as a whole can purchase it as bits and pieces. This will have a positive effect as more people (even small investors) can buy the assets. Moreover, property sellers can sell off their properties in small portions to many buyers instead of using a lot of time looking for one or two big investors.
Increased Transparency
Although cryptocurrency allows people or companies to have private transactions, public transactions are the order of the day. This will bring a significant change in real estate, where transactions are highly confidential and hidden from public scrutiny. Notably, some cryptocurrency transactions can be done privately, but that requires opting on, which often costs more than standard transactions.
Making CRE transactions public will enable potential buyers to make informed decisions based on the trends and the direction the property market is expected to take in the future. Obviously, this will be good news to the existing dealers and new entrants as they can learn the industry’s ins and outs by simply observing the trend.
Key Take away
Cryptocurrency is a major revolutionary change that will affect the way commercial real estate transactions are done forever. The blockchain-based MLS allows buyers unlimited access to relevant information on properties. Moreover, buyers can purchase fractions of properties, fees charged are manageable, and the entire process unfolds faster. With the proper support from crypto exchange platforms, cryptocurrency will bring favorable changes in real estate in 2022 and beyond.
If you want to learn more about the impact crypto has on society, keep reading our blog where you’ll get all the necessary updates. Be part of the change with Your Friendly Crypto Exchange, IXFI.
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