Today, the popularity of cryptocurrencies is becoming more and more widespread in the financial fields, from payments to remittances and foreign exchange. If you've been following banks or investing in cryptocurrencies for the last 10 years, you're sure to know the term "blockchain" the record-storing technology behind the bitcoin network. Cryptocurrencies are a big competitor with stocks and bonds. Even real estate cannot get rid of the dependency on the blockchain.

In the past, real estate transactions and high-value assets faced many difficulties through online channels because it was difficult to create trust. They are usually done offline through authorized agencies or entities. But today, blockchain has opened up a new way. The advent of blockchain smart contracts allows us to encrypt assets like real estate and trade them like cryptocurrencies like bitcoin or Ethereum on centralized or decentralized exchanges.

Blockchain encrypts real estate

Competent institutions will develop a platform where assets such as real estate after being verified will be encrypted on the blockchain network. The asset will then be traded like stocks on cryptocurrency exchanges. This makes it possible for these assets to be traded online, reaching many customers around the world.

Blockchain eliminates intermediaries

In real estate transactions, brokers, banks, have been long indispensable intermediaries in real estate transactions. But smart contracts have born on the blockchain network changed the way transactions work and partially or completely eliminated the involvement of middlemen. The removal of intermediaries will help buyers and sellers benefit more by saving commission costs for these intermediaries. The elimination of intermediaries also increases the transaction process as well as minimizes human errors. And the cryptocurrency market also operates 24/7 which is much more convenient than traditional trading today.

Trading volume and liquidity

Real estate is often a high-value asset, and it’s really tough for everyone can own it. In the traditional way of buying and selling, a transaction takes a long time to close. This time usually lasts from 3 to 6 weeks, going through real estate sales, finding buyers, signing contracts, making payments, and transferring. However, if the real estate is encrypted, the real estate can be traded easily, reaching many customers. The seller no longer has to wait for the buyer to have the ability to purchase the entire property. Thereby increasing liquidity and increasing trading volume.

Thanks to the 24/7 online trading network, buyers can reach customers in need anywhere in the world.

Owning a part of real estate

The tokenization of real estate into tokens creates a new method in real estate transactions. This allows individuals wishing to buy real estate without having to have a large amount of money to own real estate. They can buy a part of a small number of tokens and still have the right to profit when these properties increase in value which helps them have more suitable options in their investment decisions.

Transparency, blockchain cannot be changed

Assets, after being encrypted into tokens, will become part of the blockchain network. Information stored about the property such as the legality, the transaction process of the real estate will be permanently saved on the blockchain network and cannot be changed. All stakeholders can access an up-to-date real estate information network.

Transparency is important in a transaction, right? It helps reduce the risk of leading to the loss of assets. Back to the real estate bubble burst in the US in 2008 and then spread around the world, we see how greed and lack of transparency have had serious consequences for the economy.

Thanks to smart contracts running on the blockchain platform, buyers and sellers can confidently transact, reducing fraud, bringing maximum efficiency to the parties.

Operating costs compared to the traditional way

The cost of commissions and associated costs in a traditional real estate transaction is enormous. For example, in Vietnam a developing country in Southeast Asia this cost is 5% of the value of the real estate, in the US this cost can be up to 10% of the value of the property being traded.

In addition to commission costs, there are inspection and tax costs associated with the property. These costs even vary depending on the territory.

The encryption of real estate will help reduce intermediaries, reduce taxes and inspection costs. This whole process will be verified on the decentralized network through smart contracts. This creates a closed process from verifying property owners to selling properties on an automated platform. The whole process will be optimized to turn real estate into tokens - part of the blockchain network.

Conclusion

Global real estate is worth hundreds of trillions of dollars, not every individual has the opportunity to own it. Most of them are controlled by large corporations and investment funds in the world. Through tokenization of real estate, people from all walks of life have many opportunities to access the real estate market in a way that has never been possible. Where transactions are done automatically, transparently, and securely. Real estate transactions eventually become peer-to-peer exchanges powered by blockchain platforms. Something that human history has no precedent.