We’ve been watching the steady emergence of blockchain for real estate applications. Blockchain, which was introduced to the world through Bitcoin in 2009, is here to stay. How can we say so? It’s increasingly viewed as a change agent in the way business is done.
In recent real estate industry news, Rick Caruso committed to cryptocurrency. Caruso is the owner of the Rosewood Miramar Beach in Montecito, California. Cryptocurrency is now accepted at Caruso’s shops, where customers may earn bitcoin to spend at the resort — or to pay rent at the company’s luxury apartments.
Yes, bitcoin will be the coin of the realm at Caruso rental properties. Not far from Hollywood are The Luxury Apartments, above The Americana at Brand. Here, renters will send payments through their digital wallets on the Gemini blockchain platform.
July, 2021 — Real
estate has long functioned as a store of equity value that owners can exchange for
money, loans and lines of credit. Yet the typical real estate transaction is associated
with a cumbersome, bureaucratic, and fee-heavy process that every homeowner is
greatly relieved to finish.
There are other ways to invest in real estate that do not
take the same level of personal involvement and work as direct purchases of real
estate do. In other words, investments in buildings and land can be more
liquid. In addition to investing in and financing one’s own property, it’s
possible to invest in real estate exchange-traded funds (ETFs) and real estate
investment trusts (REITs) through stock brokerage accounts, including
individual retirement accounts.
Real estate is known as an illiquid asset. Turning real
estate assets into cash is a complex, costly process. This is so, whether the
owner is selling, or seeking profit from steady rental income. Returns on an
initial investment are typically slow, cumbersome, dependent on intermediaries,
and reliant on other people’s reliability and performance.
Blockchain technology is being applied to lessen the
administrative friction. Were real estate easier to transfer, proponents say, new
investment choices could be developed.
Readers may have noted a marked rise in discussions of DeFi — decentralized finance — as a way to bringing tangible assets into digital, accessible form. Real estate, with a global market approaching $300 trillion in total value, is an impressive use case. According to Paul Tostevin, director of the Savills World Research team:
By any measure, real estate is
by far the most significant store of wealth, representing more than 3.5 times
the total global GDP.
And no wonder. Territory is a good we cannot live without.
And real estate is finite.
June, 2021 — As Deeds.com readers know, we’ve
been watching the steady emergence of blockchain for real estate applications.
Blockchain, which was introduced to the world through Bitcoin in 2009, is here
to stay. How can we say so? It’s increasingly viewed as a change agent in the
way business is done.
Case in Point: El Salvador, June 2021
Cryptocurrency has just reached a new milestone, becoming a legal tender in El Salvador. To underscore the intent to make bitcoins more like a currency than a taxable asset, President Nayib Bukele said transactions could occur without being subject to capital gains tax. On the 9th of June, 2021, the president tweeted about the country’s official recognition of Bitcoin:
The #BitcoinLaw has been
approved by a supermajority in the Salvadoran Congress. 62 out of 84 votes!
History! #Btc
Bukele has replied to concerns that cryptoassets can be used by criminals, observing that criminals trade in U.S. dollars and other assets as well. The president also tweeted a rebuttal to the objection that cryptocurrency relies on coal-based electricity:
I’ve just instructed the president of LaGeo (our state-owned geothermal electric company), to put up a plan to offer facilities for #Bitcoin mining with very cheap, 100% clean, 100% renewable, 0 emissions energy from our volcanos. This is going to evolve fast!
El Salvador will offer citizenship to those who have
invested in at least three bitcoins.
Note: Bitcoin with a capital B is usually
reserved to mean the platform, whereas a bitcoin with a small b is the
cryptoasset itself. BTC is the abbreviation for bitcoin traded on an exchange.
Art met real estate in a new way this year. Krista Kim’s Mars House design appeared on the first irreplaceable, non-fungible token (NFT) for a virtual house and garden. Kim’s virtual experience was followed by an NFT listing for a home in New York (a real one) on the Ethereum blockchain.
Think it’s all a flash in the pan? Look again. Blockchain’s tamper-resistant
ledger system offers tremendous benefits for real estate deeds. It’s poised to
transform the way we trace a chain
of title. And the rise of NFTs just shows how fast things are
moving.
Throughout the past decade, blockchain technology has evolved from an upstart concept to early adoption in banking and a host of other industries. Many people are eager to learn about blockchain and how it can change the way we do business.
What, we
might wonder, can the blockchain do to remedy the hurdles and risks that
pervade the real estate industry?
The question is now ripe. Today, we can review early examples of blockchain technology in action, modernizing property conveyance. Specifically, blockchain applied to real estate has obvious potential for improving the deed recording process.
