As the world continues to move increasingly toward digital, other industries are beginning to recognize the potential use cases of blockchain-powered digital assets like NFTs (nonfungible tokens), but will it pass the proof-of-concept phase and have an impact on global real estate transactions?
Blockchain in Action
While this technology can be difficult to understand, blockchain is an independent, verifiable, and trustworthy record of events or transactions. In real estate, this technology is the source of truth for any property or transaction.
Imagine a verifiable record of a property’s ownership history? Two parties who do not know each other are looking to solidify a deal; they can now know if the seller has true ownership of that property and see, without any question, that there are no claims or liens against the selling property.
The implications for the title industry can be massive. While it may be possible without a blockchain, using this technology can help make existing processes more efficient and effective than they currently are today.
Impacts of Blockchain in Real Estate
While blockchain has the potential to be transformative in real estate, adoption has been slow. Today, we are seeing two processes slowly gain traction: how property ownership is represented and how transactions can be financed.
NFTs (Nonfungible tokens). NFTs to date have been mostly used to sell and represent digital art and collectibles—where they act as a certificate of authenticity and ownership. Though NFTs are primarily used to represent items in the digital world, it does not mean they cannot be used to represent physical products, or real property in our case. NFTs could be used to represent physical real estate assets on a blockchain—opening property investment opportunities to many more people. While NFT’s today mostly focus on ownership, in the future, they could contain more functionality: real estate land rights, liens, or even royalties on future sales.
Decentralized finance (De-Fi). De-Fi has been referred to as “Wallstreet 2.0 on the blockchain.” Most of the traditional financial goods and services that depend on centralized parties such as banks and investment firms can now be accessed directly using innovations like smart contracts on blockchain protocols. Common aspects of real estate transactions like lending, borrowing, refinancing and getting access to liquidity could become equally open to anyone in the world.
Explore PropTech Trends & Tools
Learn more about blockchain and other emerging technologies in real estate by attending the National Association of REALTORS®, Innovation, Opportunity, & Investment (iOi) Summit, Sept. 28 and 29 in Los Angeles and hear from an expert in both the lending and blockchain industries Karl Jacob, CEO and co-founder of LoanSnap, a serial entrepreneur who has been building, advising, and investing in companies for the last 20 years, view Karl’s session online now.
Stay up-to-date and attend iOi today. Register now.