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Cryptocurrency is the hottest topic of discussion in almost every industry these days. But commercial real estate is an industry that could transform itself completely as blockchain technology gains popularity.
In five years, commercial real estate will be very different from what it is today. Blockchain-based innovations in the industry are almost endless.
Third parties will no longer be needed
Escrow is one of the defining characteristics of the real estate industry. Escrow companies act as a third party to protect everyone involved in the transaction. They handle all the paperwork and money until the transaction is complete. Blockchain technology could eliminate the need for this system, making real estate transactions faster and cheaper.
Blockchain technology works on a peer-to-peer network, which means that cryptocurrency transactions are instantly recorded on each user’s computer. This creates several identical records, which cannot be edited. Each transaction becomes public.
Traditional real estate transactions took time to keep each party informed of the progress of each element of the transaction. With the automatically updated records of the cryptocurrency, everyone involved is kept up to date in real time. They can follow the progress of their transaction from anywhere in the world.
Related: How blockchain is enabling the new era of digital financial investments
Transactions will be instant
Many people in the real estate industry are frequent travelers as well. They need to check their investment properties and visit new locations to discover new opportunities. Traditionally, many parts of the real estate process have required the physical presence of those involved in the transaction, which can slow things down.
However, blockchain technology could completely eliminate the need to be in person for real estate transactions. The added security of the transaction could allow investors to sign contracts and transfer funds while being anywhere in the world.
Public transactions will eliminate industry secrecy
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 private transactions, a public transaction is the norm. Private transactions require membership and they often cost more. This will lead to a better public understanding of what is going on in the real estate world as it is common for people to fail to meet the standard.
A public register of transactions will allow commercial real estate players to be better informed about trends, which will allow better decision-making. This is especially useful for those who are just starting out in their careers. Young real estate entrepreneurs can learn the ins and outs of the industry just by keeping up with what’s going on.
Micro-investing will be easier than ever
In recent years, micro-investing has grown in popularity. Instead of one large entity financing an entire commercial real estate purchase, a group of individuals can work together to finance a purchase, greatly reducing the barrier to entry to investment.
The problem with these micro-investments is the cost of transferring money. With many small transactions, the transaction fees add up. Cryptocurrency reduces these fees to almost negligible amounts resulting in a much higher ROI on the investment.
The partnership between Bitbond and KlickOwn is a prime example of successful microinvestment through cryptocurrency. KlickOwn is a real estate investment platform that requires a minimum investment of only 10 euros. Bitbond is an online lending platform that began using tokenized bonds in early 2021. The partnership between the two companies allows KlickOwn investors to pay in cryptocurrency.
Wladimir Huber, CEO of KlickOwn, commented on the benefits of the partnership, saying: âWith these huge cost savings we are able to offer our investors higher returns. KlickOwn investors invest entirely digitally and simply with us.
Related: 5 Ways Cryptocurrency Can Help Entrepreneurs In 2018
Total security is the future
One of the most interesting features of blockchain technology is that it cannot be hacked. This technology is decentralized, which means that there is no single point of access for hackers. In order for a hacker to gain access to cryptocurrency funds, he would have to simultaneously hack into thousands of computers.
Not only are funds secured using blockchain technology, sensitive information is also completely protected from hackers. Internet users have seen an increasing number of data breaches in recent years, so the security of the cryptocurrency will make it much easier for real estate investors to rest than during their digital transactions without blockchain technology.
International investment will become cheaper and easier
International transactions can be slow and expensive. The funds transfer may take a few days or cost you a large amount of money to speed up. Even though you pay to have the funds shipped, most banks are closed on weekends and holidays, slowing the process even further. As any good businessman knows, time is money.
The longer you wait for your transaction to complete, the longer it will take you to start working to make your new investment profitable. Cryptocurrency allows international transactions to take place instantly from any location.
Today, most international commercial real estate investments carry some risk. In fact, in 2019, international investors began to slow their rate of acquisitions of commercial real estate in the United States, largely due to exchange rate risks.
However, when both parties use the cryptocurrency, the currency risk can be avoided. This could make it much easier for investors located in countries with a low monetary value to enter the markets of countries with a high monetary value. This gives investors another currency to manage, increasing their chances of winning.
Related: Cryptocurrency millionaires are branching out into real estate.