If you pay attention to real estate news, you know cryptocurrency (like Bitcoin) are making a splash in the industry. From all-Bitcoin offers to the constant stream of new blockchain buying tech that’s emerging, these unique, innovative, and ever-evolving financial tools are all the rage.
But for the average industry participant — one used to the traditional cash, mortgage, and escrow way of buying a home — these new concepts can seem pretty confusing. How do they work? Are your clients even using them? Are you expected to offer services around blockchain, cryptocurrency and the like in your own business?
As with any new and emerging tech, there are no hard and fast answers. But let’s break down the basics of blockchain cryptocurrency — as well as how they play into your role as a real estate agent.
Blockchain and Cryptocurrency Explained
Before diving into how these concepts factor into today’s real estate world, it’s important to understand what they are, at their most basic level. Cryptocurrency — or crypto, for short — is digital currency that is encrypted, secured, and traded on peer-to-peer networks. There’s no central middleman or “bank,” if you will, that controls these currencies — and there are a number of them. Bitcoin was the first to really take hold. Ethereum is another popular crypto that’s in current use.
Blockchain, on the other hand, is the tech that allows cryptocurrency to exist. It acts as a decentralized ledger, securing and recording all crypto transactions that take place across the world.
How Blockchain and Crypto Are Used in Real Estate
Now that we’ve covered the basics, let’s look at the various ways crypto and blockchain can play into a real estate transaction.
First, crypto and its supporting blockchain tech can be used to transfer rent or entire properties from one party to another. Essentially, there’s a peer-to-peer listing platform, which allows buyers and sellers to exchange digital currencies and properties directly, without the help of an agent (or their commissions). Propy is a good example of this type of platform.
Crypto and blockchain can also be used to tokenize properties. Tokenizing a property can make it easier for multiple parties to invest in or trade stakes in it. Think of it like a Wall Street trading floor — but for real estate assets. Evareium is a real estate tokenizing firm to look at as an example.
Finally, crypto and blockchain can add more security to a real estate transaction. Blockchain’s authentication and record-keeping abilities can ease concerns for both buyer and seller, making the transaction safer and more secure from start to finish. This can be especially helpful in international transactions that involve different currencies and customs. CPROP is a good example of how blockchain can help make real estate transactions more secure.
Do You Need to Do Anything?
So, the bigger question is do agents need to be working blockchain tech or cryptocurrencies into their services? And if so, how should you go about doing that?
That’s up to you — and your clients. To determine if you should be utilizing crypto and blockchain, think about:
- Your market — Are you in a pretty traditional area, where buyers and sellers are more likely to choose a lender or cash for their purchase? Or are you in a tech-heavy market, like Silicon Valley or Seattle, where savvier buyers might be on the hunt? Blockchain and crypto are also more common in investment and luxury purchases, so it might be a good consideration if you specialize in those arenas as well.
- Your budget — Adopting blockchain technology or partnering with new crypto and blockchain start-ups won’t come for free. Make sure you evaluate the full scope of costs, from adopting and installing the tech down to training on it and learning to properly use it. Do the math to be sure it’s in your financial interest to move forward.
- Your own tech-savvy — There’s no point in using a new tool or technology if you don’t understand it yourself — that will only hurt your reputation and leave consumers short-changed. Before you start using any new tech, blockchain or not, experiment with it yourself to ensure you fully understand it and grasp its use.
If you do want to work with blockchain or crypto, ease into it. Find a partner who has expertise in the area and can help you and your customers traverse this ever-changing landscape easily and without costly error. Popular platforms include Propy, Brickbloq, Atlant, and ChromaWay.
Another Way to Build Trust
Securing transactions with cryptocurrency and blockchain is just one way to build trust with your clients. Want to make them feel even more secure? Then refer them to a trusted and well-reviewed mortgage lender like Embrace Home Loans. Contact us today to learn more about how we can help your clients succeed on their home buying journey.