From the earliest days of the emergence of blockchain technology, core technolo-gists, business people, and media sources have always agreed on the obvious oppor-tunity in extending blockchain technology to real estate markets. Blockchain-based real estate transactions could drastically simplify issues around payment transfers, tracking ownership, securing international deals, and offering more granular access to real estate investment for all strata of society. A host of blockchain-based real es-tate companies have emerged, including Real, Realisto, Ubitquity, Propy, and RealBlocks. Despite this, like most blockchain applications, actual real estate trans-actions of any significance, have not yet emerged. Here are some reasons why:
1. ECOSYSTEM NASCENCE
Core blockchain infrastructure has still not reached production-level quality. Plat-forms like Ethereum, EOS, and Stellar are hard at work building out modular, enter-prise-grade technolo
gies, but work remains. Because of the immutability of a block-chain, the consequences of a software bug can be quite great. As a result, launching technology with any type of complexity requires a high level of security testing, de-laying releases. These platforms need to develop systems for modifying code with live products already being used at scale.
2. SETTLEMENTS AT SCALE
Anyone who has tried to buy cryptocurrency knows that price volatility offers compli-cations for companies trying to transact in large quantities. If a real estate company is going to manage payments for assets made in cryptocurrencies, they risk exposure to major price swings. Significant purchases are, in themselves, likely to affect the price of a token. Companies offering investment vehicles for institutions, like Gray-scale’s Bitcoin Investment Trust, may offer a solution here. Like all things blockchain, the solutions to scalability issues continue to be a moving target as the whole indus-try develops.
3. REGULATORY CHALLENGES
Though, on a technical level, a smart contract real estate transaction can occur quite easily today, navigating issues around AML/KYC, investor accreditation, and interna-tional and local law around the purchase and sale of real estate investments still lags. Real estate companies working to offer high-quality services that abide by the strictest letter of the law, still get mired down in the legal realities of our society. Be-cause of the structural features of bitcoin, verifying the sources of funding and their legitimacy becomes a major priority for any group that seeks to build a stable busi-ness in this market.
In a blockchain world with few precedents, real estate blockchain startups sit at the nexus of the old and new world financial systems. Each step along the way, a com-pany must navigate this tension. The organizations that solve these challenges will surely thrive.