The blockchain, is a technology that has existed since 2009. It is used initially for cryptocurrencies, the best known of which is bitcoin. Since then, the blockchain has come a long way. The first applications are appearing in many sectors, including real estate. Many are test-based, but some want to lay the foundation for a new model. What is the blockchain? Is it really likely to revolutionize real estate? In what ways? What has been done today? How can this evolve? Will it become one of the development axes of the proptech ?

Real estate is in every way the sector that could be reinvented with the blockchain. Indeed, most of the business is based on transactions, information (financial, legal, real estate, etc.), certification and contracts. Some companies, companies and NGOs have therefore taken the lead. There are already several applications of blockchain on the real estate sector.

The Validations of the Real Estate:

It all starts early 2016, in Africa. An NGO, faced with the problems of property that meets Ghana, decides to use the blockchain to reference and validate the cadastres of the African country. Bitland, in agreement with the local government, then launches one of the first real estate blockchain systems.

In the same year, Georgia decides to do the same. But this time, it is a government initiative, in partnership with the company Bitfury. Recently, Brazil made a similar announcement. The South American country intends to validate its cadastres via the blockchain, in partnership with the Ubiquity platform. England has also announced its desire to use the blockchain to certify land ownership. The validation of the cadastres is thus already started in several countries. But with the blockchain, we can go further.

Smart Real Estate Contracts:

The next logical step is smart contracts Blockchain development for Real Estate. In Sweden, the land registry has put in place a smart contract system that re-reads the contracts and validates the clauses automatically, thus making the transfer of ownership more fluid. Tests are underway to do the same in Chicago. Last year, the Ubiquity platform even managed a real estate transfer of a property, sold by Atlantic Sotheby’s International Realty, based on blockchain. These are just tests at the moment, but we could soon be able to buy real estate through the blockchain.

Buy a House with Cryptocurrency:

Several startups strongly believe in real estate transactions in cryptocurrency. Propy, for example, has recently made an IPO, which is a fundraiser in exchange for cryptocurrency, to finance its platform.The ambition of the startup? Buy and sell goods via blockchain, in cryptocurrency! For the moment, the currency provided by Propy will only be used to validate transactions and register them. However, the medium-term objective, defined in the white paper related to this fundraising, clearly targets the use of cryptocurrency to buy and sell real estate on the platform.

What Are The Prospects?

Now that we know that blockchain is very interested in real estate, what are the objectives of the platforms? What is the vision of entrepreneurs and investors? But most importantly, what should the real estate sector expect?

Real Estate Smart Contracts:

Today, smart contracts make it possible to make real estate transfers. Contracts could be automatically scheduled based on assets and stakeholders. The money could be released over time, automatically, as defined in the contract. The money could also be programmed to be returned in case of hidden defect or litigation. Going further, we can also imagine paying the stakeholders of the transaction automatically: notaries, state, banks, real estate consulting, etc.

If we go to the rental side and the administration of property, we can consider contracts that govern all the problems related to rental management. An incident in the apartment? The contract defines who is responsible for this type of incident, the contractor is warned and comes to repair, the money is paid directly to him and taken to the party who must pay. The tenant has degraded a property: the money is directly deducted according to the work to be done. We can easily imagine the same type of operation for seasonal rentals and platforms like Airbnb.

A Complete Follow-Up of the Property on Blockchain:

All these incidents would be recorded in the blockchain, and associated with a property. Let’s not forget that the blockchain is a register that logs everything. Investors, buyers (but also tenants, the state, the merchants of property.) could have in real time all the information related to a property, as well as to the whole stock. Add to that all the data from connected objects and smart networks (water, electricity, energy, etc.) and imagine the amount of data available on real estate products!

A More Fluid Real Estate Market:

Real-time data, instant validation, lack of control organization+. All these criteria would make the market more fluid. One could imagine that from the sale of a home, the buyer making an accepted proposal automatically becomes the owner. The blockchain would automatically validate its solvency, generate credit at current rates, schedule the down payment, all payments for the purchase of the property, and even the share that is the State and third parties. In the register, the title deeds, the various compulsory diagnoses, the sales value, etc., would then be registered. An imaginary world towards which the blockchain tends to approach us, and which would invite to rethink the roles of each one in a real estate transaction.

Revision of the Real Estate Value Chain:

If everything is historized, contracts are smart and transactions are validated without a control body, what will remain of the real estate value chain? With the blockchain, the role of the notary may be called into question, or at least some of his work could be automated. The same applies to the real estate agent, who should then confine himself to the role of adviser. The marketer is also likely to be turned upside down. His work would be essentially marketing and based on the development of the goods. The added value of the banks would be profoundly diminished, since a credit would be automatically validated and the money transfer programmed into a smart contract. Property management and rental management could be fully automated. What about co-ownership trustees? Their work would be managed via the blockchain with good share allocations in a condominium, votes and historicized decisions. But what will remain in all this? Well, he will remain human. He will remain the council, the intuitu personae. He will remain the eye, the emotion, the feeling, the intuition. It is on these values ​​that the real estate business of today must be focused if they want to exist tomorrow, in a world where the blockchain would be the norm.

Conclusion:

Threats and opportunities are hiding behind the blockchain phenomenon. It is important to take an interest in them, to anticipate them. Now the blockchain is still in its test phases. There are several limitations identified as to its development. To begin, the transaction validation time. Today, Ethereum can make 7 transactions per second; it’s very little compared to the amount of trade per second globally. Even at the scale of a country like France, it is not enough. There is still a lot of progress to be made on this point. Then, it is the security that is targeted. A few months ago, a hacker managed to hack $7 million of Ether (the currency used on Ethereum) in a transaction. And security breeds trust.

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