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The value of a single bitcoin was recently pegged at roughly $40,000 dollars and it is closely watched by many that follow cryptocurrencies in general as they measure the impact. The impact of the crypto craze has also shown up locally and is being seen in the local real estate industry. Agents and brokers have witnessed the uptick in real estate sellers and buyers willing to facilitate transactions with cryptocurrency. But there is more potential to this. Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology that manages and records data and transactions. The growing use of blockchain technology is what holds value for real estate including in The Bahamas. Here are three reasons why:
- As a digital currency, crypto could streamline payments. With real estate being one of if not the largest asset class in the world, anything that may optimize sales and speed up transactions can be a draw. There is also an automated and near-immediate accounting.
- Raising capital for large real estate projects can be challenging and costly with some lending institutions and there are also challenges with administering all the moving parts in crowd financing. Digital currencies can cost less, open larger investor pools and simplify administration, which can drive more growth in the real estate sector.
- Another area that is related to real estate is property records and legal titles. Relying on paper documentation for a land registry, has vulnerabilities to loss, fraud, and mismanagement of time and records. On the other hand, blockchain replaces outdated paper deeds with digital records on an immutable ledger as a secure and shared source of information. Records can also be more accessible. Overall, it could prove smarter and more transparent.
As with most new technologies, there are critics and legitimate questions are asked regarding security, reliability, and accuracy. There are also fears. Some wonder where the line would be drawn and argue that it may devalue establishments of real estate brokers, attorneys, and banks among other concerns. There is no doubt that, with time, such concerns will resolve with legislation, regulation, and the forces of consumerism. Blockchain is a quite different way of doing things and for the moment, there is still a distance to go for it to become commonplace. In any event, it is reshaping the real estate industry. We only touched on three possible effects on the real estate industry using blockchain technology.
Prepare for Bitcoin “Game Changer”
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Words You Need to Understand:
What is Cryptocurrency?
A cryptocurrency (or “crypto”) is a digital currency that can be used to buy goods and services but uses an online ledger with strong cryptography to secure online transactions. Cryptocurrency is a form of payment that can be exchanged online for goods and services. Many companies have issued their own currencies, often called tokens, and these can be traded specifically for the good or service that the company provides. Think of them as you would arcade tokens or casino chips. You’ll need to exchange real currency for the cryptocurrency to access the good or service.
Cryptocurrencies work using a technology called blockchain. Blockchain is a decentralized technology spread across many computers that manages and records transactions. Part of the appeal of this technology is its security. More than 6,700 different cryptocurrencies are traded publicly, according to CoinMarketCap.com, a market research website. And cryptocurrencies continue to proliferate, raising money through initial coin offerings, or ICOs. The total value of all cryptocurrencies on April 13, 2021, was more than $2.2 trillion, according to CoinMarketCap, and the total value of all bitcoins, the most popular digital currency, was pegged at about $1.2 trillion.
What is Blockchain?
Blockchain is a system of recording information in a way that makes it difficult or impossible to change, hack, or cheat the system. A blockchain is essentially a digital ledger of transactions that is duplicated and distributed across the entire network of computer systems on the blockchain. Each block in the chain contains a number of transactions, and every time a new transaction occurs on the blockchain, a record of that transaction is added to every participant’s ledger. The decentralized database managed by multiple participants is known as Distributed Ledger Technology (DLT). Blockchain is a type of DLT in which transactions are recorded with an immutable cryptographic signature called a hash.