July 21, 2024

How blockchain technology can transform the real estate industry?

How blockchain technology can transform the real estate industry?

Cryptocurrencies and the trend towards decentralization can greatly affect the entire financial and investment world, andthe real estate sector is no exception. Asset tokenization, the use of smart contracts and decentralized finance will change the way we buy, sell and invest in real estate.

Asset Tokenization</strong>

The most obvious thing that comes to mind isasset tokenization. This means the creation of digital tokens (NFTs) that will record the ownership of a physical asset on the blockchain. It's like a record of ownership in the state register, only without the prefix "state". These tokens can be bought, sold and exchanged on the platforms, making it easier for investors to diversify their portfolios and access alternative asset classes.

Smart contracts

Smart contracts are self-executingcontracts in which the terms of the agreement between the buyer and the seller are written directly in the lines of code. The key advantage of a smart contract over a conventional one is that there is no need for an intermediary that guarantees the execution of the contract. Smart contracts can automate the process of buying and selling real estate, making it faster, more transparent and more efficient. However, when you remove the human aspect of contracts, there are risks - for example, smart contracts can be hacked.

decentralized finance

Decentralized Finance (DeFi) Formorganization of monetary relations on the blockchain, within which, with the help of smart contracts, financial products and services similar to traditional ones (crediting, depositing, loans, etc.) are created, but without the need for the participation of a third party like a bank. Already, many platforms (Nexo, for example) are offering tools that offer real estate investors the opportunity to obtain loans using their property as collateral.

When global regulations come to cryptocurrencies from the side of states, we will see a boom in the development of these trends in real estate.