What is Cryptocurrency and how is it changing the Real Estate market?

Cryptocurrency has been rising to the public eye for a while now, and it would be a surprise for it to not make an appearance in Real Estate transactions. Many people often understand terms like blockchain, bitcoin, and token as just “money talk,” but it is way more than that. Let’s find out more about cryptocurrency and how it has been changing the Real Estate market.

What is Cryptocurrency?

Known as a peer-to-peer (P2P) system, Cryptocurrency is a digital payment system that does not rely on banks to verify transactions. Instead, it uses encryption, an advanced coding system. The payments exist solely as digital entries to an online database, and when the funds are transferred, they get recorded in a public ledger. That way, the transactions can happen between anyone, anywhere, and your money will be stored in a digital wallet.

Blockchain: When it comes to safety, cryptocurrency can be seen as unreliable. Blockchain is the technology used in cryptocurrency transactions, which are recorded into time stamped blocks and usually require a two-factor authentication process, that makes it harder to get hacked. Cryptocurrencies like Bitcoin, for example, are built upon blockchain structures.

How is it affecting the Real Estate market?

It is hard to picture the Real Estate market, so well known for valuing face-to-face transactions, as a digital engagement network, but it hasn’t escaped cryptocurrency’s influence. Blockchain has introduced smart ways of exchanging high value assets — such as Real Estate — in its platforms, allowing them to be tokenized and traded like bitcoin, for example.

The effect of blockchain in the Real Estate can be analyzed on ATLANT, which developed a platform that, by tokenizing real property, allows assets to be traded like stocks, online, and buyers end up owning a percentage stake of the property. Transactions become more “intimate,” as in cutting away the roles of brokers, lawyers, and, essentially, banks, resulting in buyers and sellers getting more out of their money. Theoretically speaking, cryptocurrency can be readily traded, which can result in liquidity, since a seller does not have to wait for a buyer who can pay for the entire property.

Fractional ownership is allowed through blockchain, making it convenient for investors accessing a simple trading app to buy or sell fractions of tokens, avoiding managing a property by themselves — and, depending on the terms, still enjoying usage of the property. Just as it can be a sharing experience, blockchain networks provide trust for whoever invests, as any information can be verifiable to everyone, giving less space for frauds and over-the-top costs, such as inspection and loan fees, and real estate taxes.

Where will this lead us?

The Real Estate market, although seen as conservative in many ways — specially for being dominated by wealthy corporations — , has never been a stranger to the up and coming rise of technology. The influence of cryptocurrency can be a new way of producing smart, dynamic, and transparent transactions, allowing more people to engage in the endless flow of everyday real estate exchanges. In the future, with blockchain-powered platforms being responsible for most of the work, it could even mean truly peer-to-peer economic relations.

What about you? Are you familiar with cryptocurrency? Have you ever thought about investing? Let me know in the comments!