Blockchain is finding increasingly more and more application in all fields. Real estate is no exception. How can real estate and blockchain be possibly combined? Our today’s blog post is dedicated to the use of the innovative blockchain technology in the large, ever-developing field of real estate.
How can blockchain innovate real estate?
Blockchain and real estate have only recently become friends, or business partners, if you like. This became possible thanks to smart contracts that will transform the main real estate operations in the near future.
I have no idea what smart contracts are…
To explain what smart contracts are in very plain English, let’s say that a smart contract is an electronic protocol written in a programming language.
Smart contracts, just like paper contracts, are created for users to be able to exchange information and transfer items of value. Any smart contract, by analogy with paper contracts, sets out the rights and obligations of the participants, but digitally.
So, it’s like a digital contract?
Almost. We’re used to signing contracts at legal offices in the presence of legal officials, and we all know that the process involves several steps. Smart contracts are changing the game.
To think about it, a smart contract can be signed from virtually any place with literally anybody. No actual presence of legal officials involved. That’s right, this way, you can save your precious time and money.
A smart contract is extremely secure and reliable. Once a smart contract is created, i.e., computer code is written, there is no way to bypass its conditions. That’s why it’s important to set out all contractual terms beforehand, as no changes can be made at a later time. This means that if you or another participant don’t fulfill their obligations, the punishment is imminent, no matter the reason. Usually, a fine is imposed for a contractual breach.
Can you bring an example?
So, there you are, getting a flat on a loan. Instead of a paper contract, you sign a smart contract that sets out all the terms and conditions, including the amount of your monthly payment as well as penalties for non-compliance.
If you don’t make a monthly payment, what the smart contract will do is either fine you automatically or terminate your right to the flat in a official register.
Here’s another example. You want to rent or even buy a property directly from the owner on a real estate website. You can never be sure of the person behind the screen, so you don’t trust them. The same is true for the owner who wants you to partly pay for the property before making a deal. With a smart contract, both of you can make transactions without worrying about whether it’s reliable and secure. Once you make a payment, a smart contract will be initiated with the terms and conditions you and the owner discussed previously. Each of you will be bound by the obligations. In the case of non-fulfillment, penalties will apply.
Real estate companies are facing a new era of concluding contracts in a much faster, cheaper, as well as much more secure and reliable way. Smart contract is the solution. Being a new technological advancement, it’ll take some time for it to find wide use and for more developers to appear in this field… most importantly, it’s starting to hit the fan!
Stay tuned for more blog posts like this one!
The CoinMetro Team