- Technology
September 1, 2021
Blockchain Technology and Its Potential Impact on Realty Industry
“Blockchain technology has the potential to bring in transparency and accountability in realty transactions and so the impact we’re referring here is all positive”
The realty industry is blighted by lack of transparency, which leads to disputes between parties involved, creates big gaps & lowers investor confidence in the market and raises the costs of carrying out due diligence before real estate transactions actually take place. The blockchain technology has the capacity to transform how the realty business is done by making the system transparent, eliminating title fraud and improving efficiency.
Blockchain is considered to be one most sought after technology in any countries’ real estate and financial sector. The principal underlying is maintaining a decentralised, distributed, immutable and secure record (or ledger) of the transactions taking place between different nodes of the blockchain, and which can be accessed even though with some restrictions but not replicated. Thus this very technology shall enable greater transparency, accuracy and security in the realty industry, which involves multiple parties, detailed due diligence and numerous transactions.
These contracts have instructions rooted in the transaction so that payment can only be taken as long as the instructions are fulfilled, ensuring complete transparency among all parties and reducing the likelihood of payment disputes while decreasing transaction settlement time at the same time.
Blockchain’s digital ledger transforms manual paper based systems to a somewhat automated processing where the realty industry in particular can benefit, as that enables elimination of risks such as fraud and ensures process integrity, transparency, data security & traceability.
Access to extensive listings (location based) and finding the right property becomes quite an easy process these days given the rise & use of web portals. However, a real challenge comes out through the subsequent stages of documentation, history records, due diligence, registration and the way the transactions are processed, authorized, recorded & reported. Blockchain technology shall streamline the whole process by creating verifiable digital identities and allowing secure access of property records, encumbrances and other details to the property buyers (that shall include public access from Government records and access to ownership / past records using owner’s private key).
Further processes, as in getting a mortgage & using digital signatures for payments to transfer & confirm between parties, will be arranged with due diligence & transparency and without much manual intervention.
Nevertheless, if all stakeholders involved from the real estate world work together with experts, that’s all achievable for blockchain technology to be adopted widely.
The realty industry is blighted by lack of transparency, which leads to disputes between parties involved, creates big gaps & lowers investor confidence in the market and raises the costs of carrying out due diligence before real estate transactions actually take place. The blockchain technology has the capacity to transform how the realty business is done by making the system transparent, eliminating title fraud and improving efficiency.
The Concept
Blockchain is a virtual chain consisting of digital information on various blocks (transactions) grouped together in a sequential manner. The stakeholders involved in the said industry take blockchain as the next big opportunity to improve transparency and accountability. The Government happens to be one of the stakeholders and has to be at the core of this endeavour starting with digitisation of all land records and making block of every record and transaction.Blockchain is considered to be one most sought after technology in any countries’ real estate and financial sector. The principal underlying is maintaining a decentralised, distributed, immutable and secure record (or ledger) of the transactions taking place between different nodes of the blockchain, and which can be accessed even though with some restrictions but not replicated. Thus this very technology shall enable greater transparency, accuracy and security in the realty industry, which involves multiple parties, detailed due diligence and numerous transactions.
How it works?
Blockchain uses the peer-to-peer network technology which has the potential to simplify the documentation & record keeping processes by creating, authenticating and auditing contracts in real time across real estate world, without requiring intervention from intermediary which makes it attractive to many and that is what introduces a new era of SMART CONTRACTS.These contracts have instructions rooted in the transaction so that payment can only be taken as long as the instructions are fulfilled, ensuring complete transparency among all parties and reducing the likelihood of payment disputes while decreasing transaction settlement time at the same time.
Blockchain’s digital ledger transforms manual paper based systems to a somewhat automated processing where the realty industry in particular can benefit, as that enables elimination of risks such as fraud and ensures process integrity, transparency, data security & traceability.
Access to extensive listings (location based) and finding the right property becomes quite an easy process these days given the rise & use of web portals. However, a real challenge comes out through the subsequent stages of documentation, history records, due diligence, registration and the way the transactions are processed, authorized, recorded & reported. Blockchain technology shall streamline the whole process by creating verifiable digital identities and allowing secure access of property records, encumbrances and other details to the property buyers (that shall include public access from Government records and access to ownership / past records using owner’s private key).
Further processes, as in getting a mortgage & using digital signatures for payments to transfer & confirm between parties, will be arranged with due diligence & transparency and without much manual intervention.
Challenge
Blockchain is considerably making a positive impact on the realty industry, but still far from wide scale implementation & adoption. Apparently the real estate sector is established & managed with a highly governed, regulated and a bit complex system, which enforces compliance and certification from Government institutes and companies, and that itself is a little time consuming process. So to adopt blockchain, infrastructure required to set up that shall make the process seamless.Nevertheless, if all stakeholders involved from the real estate world work together with experts, that’s all achievable for blockchain technology to be adopted widely.
