Blockchain Technology has a broad spectrum of applicability at a corporate level that goes beyond the financial sector. Furthermore, Blockchain can be a perfect solution to address the demand for secure, traceable and integrated property information.
According to David Sacks, the real estate sector might be one of those real-world applications that Blockchain may hold the key to its salvation. Here is what Blockchain could bring to the $7 Trillion asset class.
Current technology in the Real Estate
For the last two decades, the real estate market has relied on online data management and analytics software. The process to buy and sell properties requires technology to help with verification, field inspection, workflow management, and tax compliance.
In fact, Real Estate focused marketing platforms, often provide buyers with online ads and digital catalogs that can apprehend buyers’ interest through search behavior. Some software and platforms even offer buyers the possibility to take a virtual tour around the premises listed like veewme or tourwizard. Even 3D interactive and VR experiences are gaining ground through specialized platforms like matterport. The latest technological breakthrough that the Real Estate realm adopted relies on machine learning derived chatbots as an emerging tool for initial contact with buyers and sellers. However, the world’s largest asset class in value yet relies on much manual work and inefficient procedures for property information tracking and accurate asset integrity assessment. This often makes the process lengthy, disrupted, prone to fraudulent schemes, and costly.
How can Blockchain benefit Real Estate?
Whether it is in the financial settlement, supply chain, media, or energy sector, Blockchain has proven its potential, should scalability follow. The transparency, immutability and protected privacy that comes inherently with the tech constitutes an attractive facet that has been attracting more and more industries to get a glimpse of its capabilities and to try to implement Blockchain based pilot projects. In the Real Estate industry, Blockchain has the potential to help bring more liquidity inflows, facilitate access to data, enhance security, enforce accountability, and significantly lower cost and processing times.
A shared ledger on a Blockchain can improve title recordings, land claims, and relevant information in an immutable way, which can completely transform all Real Estate related transactions. No central authority is required, which can limit political and business pressure, and narrow down Real Estate firms’ and banks’ involvement in the process.
Speaking at Token Summit in New York last week, Sacks spoke about why he thinks “tokenizing” assets, if applied in compliance with the regulatory framework, can reduce or even eliminate yet another issue that the Real Estate realm is facing; Illiquidity discount for assets that can be publically traded. Sacks claimed that security tokens (the Blockchain’s version of traditional securities) could unlock a tremendous amount of value, by letting people trade chunks of Real Estate using tokens. Each token would present partial ownership in a piece of property and can safely be registered on a Blockchain. This newfound liquidity will bring new streams of cash to the asset class, and help create a derivatives market for property.
It is worth mentioning that Sacks’s VC fund, Craft Ventures, is backing a new venture called Harbor, that envisions to turn the Real Estate market into a liquid asset with digital tokenized securities. According to Crunchbase, the startup just finished a series A funding round totaling $38 Million from big VC firms, like Signia Venture Partners, Andreessen Horowitz, and Pantera Capital.