How Blockchain Technology Can Help Improve Canada’s Real Estate Market
Blockchain technology is everywhere. It is in the banking system, in supply chain management, in high-tech corporate security. Blockchain technology is also well implanted in the Canadian real estate market.
So what role does blockchain, cryptocurrency and all the underlying technology play in the real estate sector? Let’s explore!
How Blockchain Technology Can Help Improve Canada’s Real Estate Market
The first question many Canadians have is: What exactly is blockchain?
Blockchain is an encrypted record keeping system that stores data on a “block”. Each record is stored on a block and has a unique identifier. The blocks are connected through a chain and must be synchronized to function correctly. Blockchain technology is secure because no block can be hacked or tampered with without breaking the entire chain. As a result, the security of the record and data is intact, and the movement of funds and transactions is transparent and accurate.
The use of blockchain technology is not limited to cryptocurrency.
In fact, the blockchain is a viable option in all areas involving the exchange of money and financial transactions. The real estate market is one such sector and could greatly benefit from the potential use of blockchain. The Canadian real estate market can use blockchain technology to implement smart contracts, improve real estate data storage systems and provide opportunities for fractional housing investments.
Unfortunately, due to the red-hot housing market at the height of the coronavirus pandemic, the situation attracted some nefarious characters. Blockchain technology can help solve some of the shortcomings in real estate transactions through the possibility of smart contracts.
Smart contract? What is it?
A smart contract is a self-executing contract between buyer and seller. The contract is written directly as code on the blockchain, and all the conditions and agreements are clearly outlined and distributed over a chain of blocks. The code governs the execution of the contract, and all transactions recorded are irreversible and fully traceable. So because of this, blockchain technology allows property transactions to be carried out through a computerized protocol. There is no need for a central authority, external mechanism or the legal system to enforce the transaction. Smart contracts can allow property organizations to automate transactions and implement a more secure, reliable and accurate system. In addition, smart contracts can ensure the automatic release or transfer of funds when specified conditions are met. This can help reduce the risk of fraudulent activities such as property rights or mortgage fraud.
Another application of blockchain technology in real estate is data storage. Blockchain technology can give real estate agents the ability to create unique identifiers for all properties. Each record or piece of data will have comprehensive information about the property, including information about previous owners, repairs or renovations.
Since blockchains cannot be tampered with, there is no way to hide information that could potentially affect the sale of a property. This will make the system more transparent and reliable. Homeowners can also use this unique identifier to service future repairs. Any improvements to the property will then be registered automatically, keeping the data up to date.
Over the past decade, the Canadian real estate market has grown tremendously. There has been an increase in the cost of housing across the country, and investing in property and home ownership has become very challenging. Blockchain technology may change this in the future. It is possible that real estate will be tokenized and sold in portions. This will be something similar to crowdfunding. Interested homeowners will be able to liquidate or convert the whole property or parts of it. This will allow investors to share ownership in real estate investments without incurring additional costs or going through complicated transactions.
The benefits of blockchain technology in real estate
Overall, there are many benefits to using blockchain technology in real estate. Blockchain can improve the traceability and transparency of real estate transactions.
It can help the real estate market become more efficient and automated. It can also help reduce the risk of fraudulent activities. In addition, the use of blockchain technology opens the door to the tokenization of real estate assets. Investors will gain access to global assets and investor pools can be expanded due to the possibility of ownership fractionalization. Finally, property data management can be significantly improved with more secure data storage, increased transparency and easy access. This will lead to better investment decisions and improved portfolio management. Blockchain can also open the door to alternative financing models by offering more investment opportunities, transparency and continuous tracking of ROI for investors.
The improved process, automation, security and reliability will increase investor confidence and provide access to a wider investor pool within the real estate market.
The future is bright! While integrating blockchain into Canadian real estate is still a long way off, you can trust your RE/MAX agent to have the best information, tools and techniques to make your real estate transaction smooth and secure.
