Cryptocurrency is the hottest topic of discussion in nearly every industry these days. But commercial real estate is one industry that could transform completely as blockchain technology gains an increasing amount of popularity.
Five years from now, commercial real estate will look very different than how it looks today. The blockchain-driven innovations in the industry are nearly endless.
Third parties will no longer be necessary
One of the defining features of the real estate industry is escrow. Escrow companies act as third parties to protect everyone involved in the transaction. They handle all the documents and money until the transaction is complete. Blockchain technology could eliminate the need for this system, making real estate transactions quicker and cheaper.
Blockchain technology runs on a peer-to-peer network, which means cryptocurrency transactions are recorded instantly on every user’s computer. This creates multiple identical records, which cannot be altered. Every transaction becomes public.
Traditional real estate transactions required time to inform each party as each piece of the transaction advances. With cryptocurrency’s automatically updated records, everyone involved is kept up-to-date in real time. They can follow the progress of their transaction from anywhere in the world.
Transactions will be instant
Many people in the real estate industry are also frequent travelers. They have to check on their investment properties and visit new locations to check out new opportunities. Traditionally, many parts of the real estate process required those involved in the transaction to be physically present, which can slow things down.
However, blockchain technology could completely eliminate the need for being in-person for real estate transactions. The added security of the transaction could enable investors to sign contracts and transfer funds while being anywhere in the world.
Public transactions will eliminate secrecy from the industry
The public is able to see most cryptocurrency transactions. This is a huge change from the traditionally hidden transactions in the real estate world. While some cryptocurrencies allow for private transactions, a public transaction is a standard. Private transactions require opting-in, and they often cost more. This will lead to a greater public understanding of what’s happening in the real estate world because it’s common for people to default to the standard.
A public record of transactions will enable those in the commercial real estate industry to be more informed about the trends, allowing for better decision-making. This is especially helpful for those early in their career. Young real estate entrepreneurs can learn the ins and outs of the industry by simply following what’s going on.
Micro-investing will be more simple than ever
In recent years, micro-investing has grown in popularity. Instead of one large entity funding an entire commercial real estate purchase, a group of individuals can work together to fund a purchase, allowing for a much lower barrier of entry to investing.
The problem with these micro-investments is the cost of transferring money. With multiple small transactions, transaction fees add up. Cryptocurrency lowers those fees to almost negligible amounts, leading to a much higher ROI on the investment.