For those who do not know, Cryptocurrency is a digital currency that uses encryption, or cryptography, for security. There are many different forms of cryptocurrency and to name a few of them there is Bitcoin, Ethereum, Litecoin, Ripple, and over 1,000 others. There has been a lot of discussion over cryptocurrency recently due to its recent hype, and with different types reaching all-time highs in value. Cryptocurrency is not regulated at this time, as no government controls the supply of these digital currencies.
Blockchain is the technology behind many of these cryptocurrencies and is described as an incorruptible digital ledger of economic transactions that can be programmed to record virtually everything of value. To put it very simply, blockchain is a shared database that offers ways to securely log information in a more efficient way, such as improving the workflow and reducing costs. As cryptocurrencies are becoming more popular and more widely talked about we thought it was a great opportunity to explain how the real estate industry may be affected by this new technology.
Expedite the process and cut costs
Because blockchain can store various amounts of information in an incorruptible database, this can make the transaction a lot quicker. Title searches and locating property information could potentially be done a lot quicker. Also, cryptocurrency can be transferred a lot quicker than the US Dollar, or other regulated currencies. The blockchain technology could eventually cut out some of the “middlemen.” Which middlemen those are, whether they are title companies, abstractors, or loan officers, are yet to be determined. But, if these middlemen are eliminated, it could eliminate the loan fees, real estate taxes, and other fees or commissions.
Eliminate the need for title and escrow companies
The blockchain technology has the ability to store property history, credit history, and prevent fraud. The database can make secure profiles for the buyer and seller, agents, or the property which could potentially put title companies and brokers out of business. It's possible that block-chain technology can be used to provide a secure and traceable platform that can provide a clean record of ownership while reducing the turnaround time for title searches. So this brings the question: can people truly be eliminated from the process, or can the technology be used as a compliment rather than a complete replacement. With so much problem solving required during the title process, we see block-chain technology helping title companies be more efficient and accurate in their work.
Create a market for fractional property ownership
Normally real estate investments cost a pretty penny. Block-chain technology can give people the ability to put their money together and make a joint purchase. As crypto-currencies and block-chain technology becomes more mainstream, there could be a significant shift in how people and companies purchase real estate. The high risk volatility of purchasing crypto-currencies (eg., Bitcoin, Ethereum, Litecoin) could steer people toward utilizing less risky forms of block-chain technology (eg., purchasing fractional properties).
These are all potential ways that crypto-currency could change the real estate market, but we don’t expect any of these changes to happen for quite some time. The technology is still in its early stages and more research needs to be done to find out as much information as possible in order to determine the limitations of the block-chain technology. Are these all possibilities? Yes. Will we see all or any of these changes in the near future? I guess we will find out. Until then, keep on buying low and selling high so that you can purchase your dream home.
At Allied Title & Escrow, our team of industry experts and attorneys have over 25 years of experience in title, settlements and real estate transactions. Headquartered in Arlington, VA, we provide residential and commercial services throughout all counties of Northern Virginia, Washington DC and Maryland. We strive to provide the highest level of service and will handle all aspects of the title and settlement process.