Cryptocurrency and Property Investment: How Cryptocurrency is Reshaping Real Estate Transactions

The financial landscape will never be the same after the appearance of cryptocurrency, and the potential of blockchain to influence and modify industries, including the healthcare or real estate sector.

Due to the security, efficiency, and accessibility, blockchain, which records and verifies transactions, can revolutionize the real estate industry.

What can you gain using cryptocurrencies in property transactions, and what is the role of tokenization in real estate?

How did it all start?

A brief history of cryptocurrency

While the history of cryptocurrency is relatively short, its rapid rise to popularity has ensured its frequent coverage in global financial news, with enthusiasts debating about it daily.

When it appeared, together with its fans, it got into the interest of the FBI, which tried to close the black markets funded by crypto.

2013 was the best year for Bitcoin, it experienced the worst one only a year later, in 2014. 

The first cryptocurrency to appear was Bitcoin, created in January 2009 by Satoshi Nakamoto, but nobody knows if it was a computer programmer or a group of programmers using such a pseudonym.

The blockchain system, used as a digital ledger of the transactions, ensuring their security, was revealed a year earlier.

Its basic function is to record and verify transactions by being distributed and replicated across a network of computer systems. 

The first exchange-traded fund was approved in 2021, and only a year later the first one went bankrupt, which shows the fluctuations in the cryptocurrency market.

The value of cryptocurrencies is now about 1 trillion dollars, and when we compare it to the Bitcoin price in 2010, which stood at $0,2, we may be surprised by how remarkably it evolved.

The influence of cryptocurrency adoption on various industries

The emergence of cryptocurrency didn’t occur without the impact on various industries, including finance, retail, real estate, and charity, thanks to the lower cost of transactions, its high efficiency, and faster processing times.

Cryptocurrencies have helped businesses evolve and create new models and economies. 

It was all possible due to the use of blockchain technology, which is the heart of cryptocurrencies, decentralizing and securing transactions.

Comparing such payment methods to traditional banking, they are cheaper, faster, and provide much more security. 

The biggest beneficiary of cryptocurrencies was the finance and banking industry, which became more popular than some of the most popular payment methods, such as SWIFT, thanks to their undoubted speed and independence from the control of the government and banks. 

With the rise of Initial Coin Offerings, businesses started issuing digital tokens in exchange for funds, which was used as a capital-raising idea for small and medium-sized companies. 

Healthcare has been using blockchain technology for several years now, praising the security of storing and sharing patient data as well as the influence on authentication and securing pharmaceuticals and medical devices.

The real estate industry is no exception; it takes advantage of the possibility of cross-border transactions without intermediaries, and thanks to the tokenization of real property, it is now possible to trade assets similarly to stocks on an exchange with online transactions.

All of the transactions are secure, fast, and much cheaper than traditional methods.

The role of tokenization in real estate

The use of blockchain technology in real estate has caused one of the biggest benefits which is tokenization.

The system is quite easy and effective, as the whole process of buying ownership share of a real estate went digital. 

The concept assumes the transformation of interests in properties, debt, or cash flow into digital tokens.

Each token means a percent of ownership of a property, giving the specified number of tokens related to the share of ownership to the partners, which then can sell, trade, or liquidate.

The whole process is easy, saves lots of time, ensures security, and reduces the cost of intermediaries.

To picture the idea, imagine investors willing to invest in a residential area but lacking the financial resources to achieve the goal.

Finding a trustworthy partner, who will have the same plan for the future investment is not that easy, and that’s where fractional ownership comes as a solution.

Partners and investors can buy as many tokens as they can afford, giving them the shared ownership and shared profits of the rent.

How can real estate change due to cryptocurrency?

The cryptocurrency market can have a great influence on the transformation of the real estate industry in a multitude of ways. 

It’s enough to start with trading platforms and online marketplaces, which will be changed by blockchain technology, providing more security and efficiency, and access to real estate transactions to everyone interested.

The role of estate agents and brokers will be changed too, by greatly limiting their role in online transactions, which will be conducted without any intermediaries but directly between the seller and the buyer.

They both can benefit from such a solution by speeding up the process of selling or buying and removing the cost of the agent's service.

Moreover, the transactions will all be automated. 

Real estate has been transformed into a liquid asset due to the use of tokens, and it happened much easier and faster than in the case of the liquidation of a property in a traditional way.

The property can be now represented in the form of digital tokens, which can be easily bought, sold, or traded.

With the use of tokens, fractional ownership is possible, allowing investors to buy fractions or shares of property by use of tokens.

That’s the step into the democratization of the real estate market, giving more people a chance to invest. 

Finally, the real estate smart contracts, will be automated and self-executing, and get rid of any disputes or frauds.

The transaction is coded into the blockchain, with the payment released when all the requirements are met, making the whole process secure.

Disclaimer:

This information is of a general nature only and should not be regarded as specific to any particular situation. This should not be taken as financial advice to buy, trade, or sell cryptocurrency or use any specific exchange. This is not intended for use as investment, financial, or legal advice as each individual's need will vary.

Binance Australia is not affiliated, associated, endorsed by, or in any way officially connected with any individual or organisations mentioned in the article. Binance Australia is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly by use of this newsletter and expressly disclaims any and all liability for any loss or damage you may suffer.

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