Despite periods of shocks and stagnation in the market, real estate remains the most reliable and fast-growing investment asset.
The experts of Becar Group arrived to such a conclusion, studying the profitability of various assets for more than twenty years. According to Savills, in 2017, the total value of global real estate was $ 228 trillion. For comparison: all shares, bonds and debt securities are valued at $ 170 trillion. While the real estate market is attractive, at the same time it is conservative. Per a century ago, in order to complete a deal you need an agent, an appraiser, large quantities of documents, and a long bureaucratic time frame in which to receive and process them.
However, as experts predict, over the coming years the situation will change. Blockchain technology will change the entire real estate market. The same thing is going to happen with many other areas - from the banking system to music industry.
How the Blockchain works:
Blockchain is a way of storing data through which every individual participant of the system stores the information - updating automatically. In other words, the Blockchain is a distributed, i.e., decentralized database. The information about operations is written in blocks, and these blocks are linked by means of complex mathematical algorithms into a chain - hence the name of the technology. Blockchain is based on cryptography. A hash sum – like a kind of unique time stamp (you can compare it with the fingerprint) is added to each block of information. You cannot rearrange the blocks or change the data (only add a new entry) for the system will immediately notice the breakdown of the chain structure and the discrepancy between time and hash sums. Since the database is encrypted and decentralized, it is reliably protected from hacking.
Deals in the Blockchain are conducted with the help of smart contracts - computer algorithms. The parties sign a smart contract with the help of personal electronic signatures. Information, the subject of the contract, is stored inside the Blockchain network, and the smart contract has direct access to it, so there is no need to interfere. Computer protocols verify the possibility of a transaction - if the conditions meet the requirements, the smart contract will immediately come into effect.
Blockchain technology was developed in 2009 as a distributed database for the digital currency Bitcoin, which was later called the world's first cryptocurrency. Now Blockchain is the basis of all known cryptocurrencies, but it can store any information, which means that the technology can be implemented in almost all areas of human life.
International and national legal frameworks that regulate the use of Blockchain are not yet available. However, individual organizations, government departments and even entire cities like Dubai, are already implementing various projects based on this technology. Many countries all over the world consider adopting Blockchain as a legal basis for storing information. So, when it is fixed by law, the economics, including the real estate market, will radically change.
What will happen as Blockchain arrives?
Money transfers in Blockchain. A house in Israel was purchased for 500 BTC as far back as 2012. In addition, Switzerland, USA, and the UK, are among countries where you can buy real estate for cryptocurrency. It takes a small amount of time to transfer bitcoins from one wallet to another. However, in order to make a successful deal, fiat currency still has to be transferred to sellers’ bank account. Experts anticipate the elimination of intermediaries in a form of banks. Information saved in Blockchain will count as proof of transfer for both crypto and fiat currencies.
Register’s transfer into Blockchain. Distributed ledgers are going to be used for keeping data about sale and purchase transactions, registration of property rights, arrested property, etc. Data will be available in mobile apps, for example. Possibly, every real estate object is going to receive a “Blockchain ID”, which has all the data about that particular object. This ID would substantially ease and speed up appraisal.
Swedish authorities have been transferring land cadastre to Blockchain since 2016. Furthermore, Ukraine partially implemented Blockchain for land cadastre in October 2017. So far, Blockchain is used for keeping data from the old cadastre, while information about deals and transactions is kept in the old register.
Smart contracts instead of ‘old’ contracts. When Blockchain is fully implemented, most deals could use smart contracts. Smart contracts would check the legality of any given deal and would block those where the deal were impossible to conduct for some reason. Computer protocols would almost instantaneously check objects for information (who it belongs to, if it is burdened, if heirs claim it etc.) that would otherwise have taken months to check. After the deal is done, algorithms transfer property rights to a new owner.
Escrow accounts in Blockchain. Escrow accounts, which hold property before the right conditions are met, are commonly used in real estate deals. Mainly banks are the holders of such accounts now. Transferring escrow accounts into distributed ledgers would greatly ease and accelerate money transfers. For example, if someone decides to buy property during construction, their money is transferred to an escrow account. As the construction is done and customer receives the property rights and the money becomes available to the developer. Unblocking occurs with the help of a smart contract.
What are the benefits for real estate market?
Security and Transparency. Blockchain would cut short the amount of fraudulent schemes. Any of the parties would be able to find required data about the real estate object, and check the authenticity of each document as this information would be stored on distributed ledgers. In order to forge data, one would have to hack all the computers that hold copies of distributed ledgers. However, criminals could entice hidden keys from the owner and use it to create a victim’s electronic signature. This is the most vulnerable part of Blockchain system.
Cutting deal time. In the Blockchain era, everything, including background checks and finding information, which required months or weeks prior to implementation of Blockchain, will take just a few minutes.
Reducing costs. Blockchain will cut the amount of commissions that you are required to pay - currently as much as 2% of any deal.
Remote access. One will be able to receive information from any point on the globe, without having to be actually inside any government building. Authenticity can be verified with the help of an electronic signature.
Global digital real estate market.
All of the aforementioned advantages are present in the METRUMCOIN project, which aims at creating a global real estate market that is open and accessible to everyone. The METRUMCOIN platform will be used for communication and the conclusion of deals between the main market participants (realtors, brokers and property owners, investors), experts and service providers (developers, architects, appraisers, notaries) and buyers of real estate.
In addition to being the digital database of real estate and development projects, professional communities and chats, METRUMCOIN's multi-level platform will include a global market of investors, an investment fund and a bank, available to each participant. A specialized international arbitration service exists to resolve disputes.
Transactions within the platform will be conducted via the project's own niche industrial cryptocurrency, which is called METRUMCOIN. Its capitalization will be provided by the income of the platform, i.e. transaction fees, and for services provided to participants. The introduction of its own cryptocurrency will greatly simplify and reduce the cost of transactions within METRUMCOIN. iDeals, the new generation of smart contracts will be used for registration of new deals with. Blockchain technology will provide security and transparency of all transactions.
The project team will develop a single legal framework for the digital real estate market. As a result, the METRUMCOIN platform will eliminate all geographical, bureaucratic and transactional barriers currently endured by the market.
The project has already received support from global IT specialists and real estate experts. The Founder of METRUMCOIN, Telman Abbasov, has presented the project at the largest international conferences in the field of real estate - MIPIM-2017 in Cannes, and also at a conference dedicated to Blockchain development, BlokTex-2017 in Kuala Lumpur.
In order of further development of the project, an open crowdsale campaign has started. You can buy METRUMS, the platform tokens, with a 20% off until 9th of December. These can later be exchanged for the niche industrial cryptocurrency at a rate 1 METRUMS = 2 METRUMCOIN.
Experts predict, Blockchain will become an essential part of world capital by 2025. The global real estate platform METRUMCOIN will bring this moment closer.