With the growth in popularity (and notoriety), of cryptocurrency, it is perhaps time to accept that, whatever attempts at regulation there may be, cryptocurrency is here to stay. The potential for such data to streamline processes, cut costs and improve efficiency in a number of markets is worth exploring. Among those markets most likely to be disrupted by these trends is real estate; particularly property development.
Cryptocurrencies in Real Estate?
Last year headlines were made when in Dubai, a hotspot for real estate investment, residential real estate was opened up for purchase in bitcoin, utilising the US bitcoin payment service, BitPay, and opening a much-needed method to cash out on the notoriously volatile digital currency, which is increasingly criticised for the fees associated with trade and conversion.
However, what makes some cryptocurrency so useful for trade in real estate is the blockchain technology recording transactions. The utility of having a public ledger of transactions is almost self-evident, detailing the transfer of property rights on a public forum without reliance on paper documentation. The idea behind this is that it will bring greater transparency to markets, detailing property rights, as well as simplifying the necessary procedures preliminary to property transactions, such as due diligence. Yet, for such practice to be widely accepted, there must be evidence of effective supporting software to enable such transactions. This is the goal of IBREA, a non-profit organisation with the purpose of integrating blockchain with the real estate market, citing advantages which include cost reduction, heightened security to stamp out fraud, and faster transactions.
Whilst the advantages of blockchain technology are generally accepted, one must ask themselves, what sort of currency would be suitable for such transactions? Bitcoin, once praised for the convenience of bypassing banking networks to offer low transactions fees and relatively quick transactions, has had its convenience called into question more recently. With rising transactions fees and greater delays between transactions, as well as the onerous energy demand it requires, there are certainly more cost-effective currencies for such transactions.
Over the past few months, a number of tokens have arisen with real estate in mind. The demand for a reliable trading platform exists. However, with market manipulation being a real risk, and ICOs tending to promise everything under the sun, it seems that the best choice is technology built with a focus on smart contracts, offering some degree of security for transactions.
Some tokens to look out for include:
PBT, which focuses on the rent and sharing of office space and workstations.
PRO, a global property listing site with a decentralised registry.
REAL, which also utilises blockchain technology, but with a view to granting access to a crowdfunding platform tailored to property investment.
These tokens remain to some extent in their infancy, with REAL still being developed. Therefore, Ethereum seems an obvious choice, albeit not necessarily designed with real estate in mind. Being the second most popular cryptocurrency traded, and generally more stable than bitcoin, ethereum was designed with smart contracts in mind, seeing to it that upon the fulfilment of conditions a transaction would be processed. Moreover, with bitcoin’s energy consumption, transaction fees and transaction capacity (currently around 7 transactions per second), ethereum boasts more practical benefits in this respect, being cost-effective and comparatively fast.
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