As of 2021, over 18,000 businesses worldwide accept cryptocurrencies. Almost 4% of the world’s population owns some form of cryptocurrency. Cryptocurrencies now have a strong and ever growing impact on a wide variety of financial markets including foreign exchange, payments, venture capital, startup loans, stock investing, and more.
Blockchain has been a major disruptive technology in the financial services industry. Real estate hasn’t been able to hide from Blockchain’s disruption either. Now, real estate transactions can be conducted through digital channels, thanks to Blockchain.
Smart contracts have even made it possible for someone to get a crypto home loan. Real estate is traded through cryptocurrencies such as Bitcoin and Ethereum. The following are some additional ways in which crypto is becoming more relevant in the real estate industry.
How Crypto is Becoming More Mainstream?
Blockchain is a decentralized technology. Data is transparent and immutable. It’s accessible to all peers who are on the network. Lack of transparency in financial institutions often leads to dreadful consequences. A decentralized system has trust and security built into the system. Smart contracts also reduce the number of fraud attempts. Buyers and sellers have more confidence while conducting transactions.
This confidence is reflected in the fact that El Salvador recently became the first country to adopt a cryptocurrency (Bitcoin) as legal tender. Also, a real estate developer in Southern California is so confident in the future of cryptocurrencies in real estate, that they now accept Bitcoin as payment for both their commercial and residential real estate rental properties.
The real estate ecosystem has always included lawyers, banks, and brokers. However, Blockchain might change their roles when it comes to the process of getting a crypto home loan. Not including intermediaries will lead to significant savings on fees and commissions charged to buyers and sellers. It also saves more time as there’s no back-and-forth with intermediaries.
Due to the time it takes to conclude sales, real estate hasn’t always been considered liquid. The case is different with cryptocurrency and tokens. They can be traded through exchanges for fiat currencies. Real estate can be readily traded just like tokens. Real estate as a token, allows a seller to get equity out of their property, even before they find a single seller who is able to afford the whole property.
The barriers to real estate investing have been lowered by Blockchain by allowing fractional ownership. Blockchain allows investors to buy and sell fractions of tokens as they please through a trading app. Fractional ownership also helps investors by not solely placing the burden on managing the property on themselves, they don’t have to take care of maintenance or leasing. Property owners no longer have to use their properties as collateral for loans. They can easily get access to quick cash through fractional ownership. The owners may still also be able to continue enjoying the use of their property depending on the terms.
Cryptocurrency is rapidly changing the way financial transactions are handled worldwide. Nowhere is this more evident than in real estate. The transparency and flexibility is an attractive aspect for many buyers and sellers who have used digital currency to buy or sell real estate. The reduced costs, and improved speed in closing transactions, is yet another welcomed disruption in the real estate industry.