Cited as the technology to lead fintech revolution in 2018, Blockchain technology is a digitized, decentralized, public ledger of all cryptocurrency transactions which has the potential to transform multiple industries and make processes more transparent, secure and efficient.

The current processes in the real estate sector are largely paper-based and are still in the hands of many intermediaries resulting in poor data quality and high redundancy. A study published by Deloitte suggests that there is undeniable scope for Blockchain technology in Real Estate, but before we try to comprehend that let us know Blockchain a little better.

What is a Blockchain?

In one word, Blockchain is your revolutionised database.

Traditional databases use a client-server network architecture, where a user (client) with permissions can change entries that are stored on a centralized server by changing the master copy, making only the updated copy available.

Control of the database remains with administrators, allowing for access and permissions to be maintained be a central authority.

This is not at all the same as with a Blockchain.

For a Blockchain database, each participant maintains, calculates and updates new entries into completed blocks which are added together to form a chain like pattern in chronological order, known as the Blockchain.

Once completed, a block goes into the Blockchain as a permanent database. Each time a block gets completed, a new one is generated. The Blockchain has complete information about different user addresses and their balances right from the genesis block to the most recently completed block.

The technology allows market participants to keep track of digital transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the Blockchain, which is downloaded automatically.

It is possible to digitize, code and insert practically any document into the Blockchain. The technology was designed so that these transactions are immutable, meaning they cannot be deleted. The data can be distributed, but not copied. Furthermore, the authenticity of the record can be verified by the entire community using the Blockchain instead of a single centralized authority.

Why in Real Estate?

• Improve property search process

A Blockchain-based MLS would enable data to be distributed across a peer-to-peer network in a manner that allows brokers to have more control over their data, along with increased data democracy, as listings would be more freely accessible. As per a recent Deloitte survey of 308 executives, 36 percent of respondents perceive efficiencies (lower costs/greater speed) as one of the key benefits of using Blockchain technology. While many Blockchain uses are in proof-of-concept stage, companies such as Rex MLS have started testing the technology for property listings.

• Expedite pre-release due diligence

Digital identities for a property would imply a digital identifier that consolidates information such as vacancy, tenant profile, financial and legal status, and performance metrics in digital form. A combination of Blockchain technology along with digital identity can alleviate the challenges of physical identity proofs.

Digital identities of properties linked to the digital identities of owners and tenants can create valuable online records for a property, improve lease information management, and greatly ease the due diligence process.

• Enable smarter decision-making

Blockchain technology can be the connective tissue between technology systems of CRE companies and other participants in a leasing transaction by providing a more open and shared database for all involved parties.

This would enhance data quality and also enable real-time recording and retrieval.

Where is India in the picture?

While announcing the Union Budget 2018-19, Finance Minister Arun Jaitley stated that the government was looking at adopting Blockchain tech for disrupting and streamlining various sectors.

The technology is already gaining momentum in Andhra Pradesh.

The state government is working with a Swedish start-up to set up a Blockchain-based land registry system that allows people to collateralise property, get loans, and invest against that asset. Tracking property ownership using Blockchain allows people to avoid disputes, frauds, and errors, while also lessening the administrative hassle of registrations and title transfers.

As a round-up, the presence of Blockchain technology in real estate sector would not only prove to be beneficial for the brokers but will also help the homebuyer in safe money transfer and data storage.

At the moment there are few actual projects or applications of Blockchain technology in the real estate industry. However, more opportunities can be seen in areas of land registration, in the letting processes and other property management as well as real estate financing.