Blockchain and Real Estate

Blockchain Technology, this technology is considered by many to be the greatest technological innovation since the advent of the internet. Blockchain provides transparent processing of large amounts of data, making it a significant 'disruptive technology' for the real estate sector. This technology is ideal for recording transactions, registrations and contracts. Although the application of Blockchain is still in its infancy, the pace of developments is extremely fast. What should you know about blockchain?

Blockchain

Blockchain is a decentralized online register of transactions, where every user has an exact copy of the register at his disposal. In addition, the register is secured, which means that previous transactions cannot be changed. After the involved parties approve a transaction, the data is encrypted with strong cryptography and simultaneously captured across the network of users. Finally, every transaction is validated by the network, making abuse practically impossible. Irreversible security, automatic encryption and decentralized logging make the process extremely reliable, controllable and transparent.

Blockchain has the potential to revolutionize the digital world. In addition to the well-known application as a payment method (Bitcoin), there are countless other applications to mention. For example, Maersk is experimenting with its own Blockchain, on which a kind of digital passport for containers is kept. The port companies of Rotterdam and Antwerp also want to use the technology behind Bitcoin to make container transhipment safer. Governments and financial institutions want to simplify and standardize the Know Your Customer process via Blockchain, in order to quickly check whether a customer's identity details are correct. Many Internet of Things-connected smart devices are based on Blockchain technology, enabling new business models in the sharing economy of self-driving cars, e-bikes and other devices. The possibilities are limitless!

Blockchain and Real Estate

Blockchain allows data to be shared securely and quickly, allowing transactions to take place without the intervention of third parties. Previously, this required the signature of third parties, such as a notary or bank. Blockchain thus eliminates the human factor of trust and digitizes and decentralizes the registration of transactions. Because transactions are tracked in real time, the Blockchain makes an important contribution to the completeness of data.

"Smart contract" applications through Blockchain make it possible to enter into lease contracts in a safe and controllable manner. The Blockchain offers a platform on which the agreements can be viewed by all parties involved, whereby the software records the conditions under which actions must be taken. This is extremely suitable for flexible rental models, which are currently booming. Blockchain can help simplify the rental process, keep occupancy levels high and minimize debtor risk. Blockchain thus contributes to the optimization of returns.

Blockchain offers help with (complex) due diligence processes. Namely, data on a Blockchain network is accessible to all users and validated by the network. This creates a consensus on the correctness and completeness of data, such as rental conditions and the legal and technical condition of the property.

Change will come

Even though the real estate sector is not known for innovation, change is taking place. Think of the standardization of rental agreements, the transformation of office buildings into apartment complexes or the application of flexible rental agreements. In recent years, the first important steps have also been taken cautiously in the application of Blockchain technology. The success of these Blockchain real estate pilots proves the added value of the technology. More initiatives and / or pilots are needed before this new technology will be widely embraced and applied, given the diversity of stakeholders that data will have to store in a Blockchain. An important aspect for a broad roll-out of Blockchain technology is the uniformity and thus comparability of data. Banks are already obliged to adhere to SBR (Standard Business Reports) for supplying financial information. To achieve a workable result, the same must be done within the real estate sector and all relevant variables must be identified and valued. Added value will only arise if all parties involved use the same definitions as a starting point.

In conclusion

Cooperation and transparency Blockchain promotes collaboration within the chain: all users in the network have access to uniform and correct data. In addition, several parties check the origin and ownership of information. The availability and transparency of data will contribute to the further professionalization of the real estate sector. Efficiency and flexibility Blockchain can be used to respond quickly and flexibly to events by setting up smart contracts. In addition to flexibility for tenants and landlords, this also provides administrative lighting. In addition, it is possible to make event-driven decisions through the real-time availability of data. When Blockchain is deployed successfully, these algorithms, among other things, provide administrative relief and the focus can be entirely on data analysis and decision-making.