The crypto world has been a bit of a gloomy place as of late, what with Brexit likely to change the crypto marketplace and various issues around safety and regulation. That is why I have decided to write about a brighter side to the crypto world in the form of blockchain technology; specifically, smart contracts. You may have heard about how useful blockchain technology is but when you dig for details, they prove a bit hard to pin down, well with smart contracts and real estate you can easily show to your non-crypto mates how useful blockchain tech is.
What Are Smart Contracts?
Some cryptocurrencies use smart contracts on their blockchains with a key one being Ethereum. A smart contract is basically a precursor to AI where if a program sees that a set of rules has been met, it will yield a result. In very simple terms you could think of it like a recipe for a cheese sandwich, where the program sees that it has cheese and bread and the outcome is a cheese sandwich.
That is of course a very basic analogy of a smart contract and often the inputs are numerous, and the resulting outcome will be something entirely different.
How Smart Contracts Are Used in Real Estate
Real Estate transactions have one big issue, they take a long time and are very detail orientated. Property title deeds can have restrictions and rules that need to be carefully checked and matched up with registries and simple things like changing the owner on a deed can take months. This of course means that property takes a fair bit of time to change hands even if funds are immediately available and it causes untold misery to millions each year who want to sell their property and buy a new one.
Smart contract platforms are already in existence to combat this issue and they are having a great deal of success under test.
How a Smart Contract Works in Real Estate
In simple terms, each house has all its deed information entered onto a database. When facilitating a transaction this information is married up with other required information such as a mortgage lender that needs to have a charge on the deed as well as adding the name of individual that is getting the mortgage.
All this information is input into the system and providing all parameters are met then the deed will change hands digitally and instantly.
This is fantastic for 4 reasons;
- It is secure and all information is transferred in a secure way (by end to end encryption). Storing the details of the transaction on the blockchain.
- Information can’t be lost which is a big issue in real estate especially around land boundaries and access. The property will always have all its details, boundaries and access stored on the blockchain.
- Information can’t be doctored, because it is secure and encrypted.
- It is much faster; a computer can process a transfer in seconds whereas a human might take days trying to verify information.
All of this is exciting news for both the real estate industry and cryptocurrencies as smart contracts are really providing a very valuable benefit in the real world which goes a long way to making crypto sustainable and mainstream.