The potential of blockchain in real estate investment

On Behalf of | Sep 21, 2018 | Commercial Real Estate |

Just as Bitcoin and other cryptocurrencies are sparking interest among many entrepreneurs in Southern California, the potential of blockchain technology could also be a boon to commercial real estate investors. Blockchain allows information to be distributed through a digital ledger and shared widely. This decentralized system allows transactions to be completed and recorded reliably. While a blockchain technology underlies Bitcoin, Ethereum and other cryptocurrencies, it offers a wide range of potential future applications, including the ability to be exploited as a digital contract mechanism for real estate transactions.

Everything from property to shares in a fund to currency can be exchanged in a blockchain transaction. The results of the transaction will be recorded in the encrypted, shared ledger. Theoretically, this could remove written contracts from some types of real estate transactions. However, there are a number of reasons why blockchain may take some time for real implementation in the market, including the need for just the kinds of assurances and guarantees that are represented in a real estate contract. Even when contracts are involved, however, blockchain technologies can be used to store and manage records and handle property transfers in a secure, verified manner.

Experts say that blockchain will affect the commercial real estate industry over time. Because ledger entries are validated by consensus, a transaction or property transfer can happen instantly in a verified and credible manner. Furthermore, blockchain could be used to build a token system that enables people to make small investments in bigger real estate projects.

Blockchain is still in its early days in the commercial real estate market, but it can be important for investors and developers to consider innovative projects and contracting methods. A business and commercial law attorney can work with developers and investors to develop contracts, address title disputes and more.

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