Blockchain in Real Estate

Versatile Blockchain capabilities

The blockchain is a decentralized ledger of all transactions through a peer-to-peer network. With this technology, subscribers can make transactions without the need for a central certification authority. Possible applications include cash transfers, transaction settlements, financing and many other. As the name implies, the blockchain is a chain of cryptographically encrypted blocks containing specific information or data. After a transaction, the data recorded within a blockchain can not be changed since the downstream blocks verify the upstream transactions.

In the context of the real estate industry, there are several possible uses for the block chain along the entire property value chain. In the short term, blockchain can be used to transfer the purchase price for real estate transactions using established cryptocurrencies, as well as through initial coin offerings (tokenization). First experiments have already been observed on the market.

For example, Sweden is already working on a blockchain-technology based digital land register. In the medium term, the application of smart contracts is expected. These are electronic contracts based on computer protocols that can automatically monitor the stored clauses or rules and can automatically execute defined actions in the event of a trigger event. Thus, a written fixation in paper form is unnecessary. In the long run, Blockchain will help to significantly increase market transparency and solve principal-agent issues.

In addition to advantages such as the cost reduction of processes, increased transparency and irrevocable documentation of the processes, there are also some disadvantages. Due to the highly complex technology, today there are still major challenges in terms of acceptance and implementation in companies, in particular due to the usually high computing power required and the associated exorbitant power consumption. However, this depends on the technology used. In addition, the regulatory implications are not fully resolved and deter use of blockchain technology.