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Blockchain is an emerging technology that’s impacting the way industries conduct business, especially real estate. Not much is known about blockchain among the general public besides its association with bitcoin. While real estate professionals should pay attention to this new trend—as it will significantly change transactions and data-sharing—it will not make their careers obsolete. Agents have the invaluable ability to build relationships and empathy, which are pivotal to success in the industry. Blockchain is merely a helpful addition to their toolbox.
Blockchain is a series of computers, ranging from thousands to millions in number, which are able to simultaneously keep record of the same event or transaction in a ledger that’s publicly viewable. Bitcoin is an application of blockchain. The transaction of buying bitcoin with cash is witnessed by these computers, validating a person’s ownership of the bitcoin when attempting to sell the bitcoin for cash later.
The benefits of blockchain technology are tenfold, and it can be applied for any process that involves a transaction, record-keeping or agreement. First, it keeps sensitive information safe: each record is encrypted and the ledger is difficult, if not impossible, to hack. Second, every computer’s record provides a consensus of the validity of any transaction. Third, blockchain allows two or more parties to engage in a transaction without the need of a middleman.
In terms of real estate, blockchain will make property data more secure and accessible to the public, in addition to making transactions efficient and safe. This increases the accessibility of data integral to home-buying and -selling—and ensures independent industries are held accountable for sound business practices.
The Multiple Listing Service (MLS)—used to store information regarding clients, contracts, and more—is not centralized, difficult to access and often out-of-date. With blockchain, a nationwide database can be created, offering centralized and accessible property information.
Blockchain will drive an increase in smart contracts, which allows contracts, escrows, property records and more to be completed—and financial transactions to occur without the need of title companies or attorneys. Forbes analysts predict that the home-buying and -selling process might become as easy as using a shopping cart on a website. Blockchain has the capacity to ensure the homebuyer receives the deed or title, while the seller takes home the profit through cryptocurrency.
Some fear that these changes will make certain real estate professions unnecessary, but this is false. Real estate agents are still an integral part of the home-buying process as a dependable source of knowledge, advice and emotional support for clients during this important decision. Agents are adept at handling hiccups in the buying process, such as when a client suffers a traumatic loss, loses their job or gets cold feet. As human beings, they can relate to these troubles and provide practical solutions, while computers cannot.
Blockchain isn’t a replacement for real estate professionals; it’s a helpful tool for ensuring easy and secure transactions and data-sharing.