You might already know that Max Crowdfund is the first international real estate crowdfunding platform that uses blockchain technology. Blockchain is quite a new technology and provides a lot of benefits and opportunities. This article highlights the 5 most important benefits of using blockchain technology in the real estate market.
Blockchain is a kind of database in which transactions can be stored. The type of transaction may differ. The best-known example of this is a digital currency, also known as cryptocurrency. In addition, it is also possible to use blockchain to exchange important data, such as contracts, diplomas or property deeds. The information, whether a digital currency or important data, is split into different blocks of information that are digitally signed by all parties. There is no third party, and everything is stored in the database.
According to a financial service provider Deloitte study, blockchain can be used very well in the real estate industry. There are plenty of opportunities to apply blockchain in real estate. The processes become paperless, so you no longer have any administrative hassle. For the traditional real estate market, this can mainly have advantages when transferring a house. As discussed earlier, there is no need for a third party anymore. A more modern form of real estate investing, such as crowdfunding, is an ideal way to offer more transparency.
To explain the impact of blockchain on the real estate sector, it is important to first understand how investing in real estate through crowdfunding works.
There are many benefits of blockchain for real estate. You can read the main benefits below.
Blockchain functions like a big monitor: all information (for example, related to fund transactions) will be stored on the blockchain in the right order and cannot be changed afterwards. Therefore, a third party to control the process is not necessary. It is a reliable, automatic process and reduces the need for intermediaries. Blockchain is decentralized, and therefore, it speeds up the process. Especially in the real estate sector, where usually a lot of intermediates are required, and lots of paperwork is involved, blockchain provides the solution.
Did you know that it is almost impossible to hack a blockchain? Each transaction in a blockchain is called a block. When more transactions get connected to each other, you get a blockchain. Transactions in a blockchain are inflexible: each block contains data from the previous block in the chain. This data cannot be manipulated or altered.
But not only hacking will be almost impossible. Since the data in the blockchain cannot be changed and all the paperwork gets implemented automatically, things such as inaccuracies and fraud become impossible. It improves quality control.
A smart contract is an agreement written in code language, which automatically takes effect when certain conditions are met. Smart contracts have the advantage of monitoring the fulfilment of all obligations. The code controls the execution. On top of that, all transactions are trackable and irreversible. Payments will be done automatically, and in case one single obligation is not fulfilled, another party cannot move further. Only fair play. Smart property contracts also increase processing speed.
Blockchain offers the possibility of fractional ownership. Thanks to fractional ownership, the barriers to real estate investing are being lowered. At the Max Crowdfund platform, investors can invest together in one real estate project. A higher target amount can be set, and the entry level can be lowered. Therefore, people can start already with investing with as little as €100 with Max Crowdfund.
As mentioned before: all the information gets stored on the blockchain. What we did not mention yet, is that all this information will be visible and accessible to the seller and buyer of a real estate project. If any information gets changed, both parties can view the change. Blockchain provides maximum transparency of real estate projects. Once the investment opportunities have been subscribed, Max Crowdfund registers them on the blockchain. From that moment everyone has access to this information. In addition, in-depth investment portfolio performance and statistics are available. Knowing what you are investing in, creates a secure feeling. What you see is what you get!
Above benefits are just a few of the many benefits that blockchain technology offers. Blockchain is rising its popularity, especially in the real estate market. In July 2020, Max Crowdfund received approval from the Dutch Financial Authority (AFM) for the use of blockchain within its crowdfunding projects and became the first international real estate crowdfunding platform using blockchain technology.
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