Blockchain is already among the industry's most disruptive emerging tech opportunities, with several real-world use cases that can be tapped into.
The technology is a series of ‘blocks’ containing data from a distributed and open ledger linked together to form a chain. This makes the blockchain secure, decentralized, and scalable, making it ideal for use in various business areas.
However, while the use of blockchain in finance or healthcare is widespread, one area that is often overlooked is blockchain in real estate and infrastructure building.
The construction and real estate industry is known for its complex supply chains, inefficient processes, and lack of transparency. With blockchain, there is a potential to solve some of these challenges and create a more secure, efficient, and transparent system.
This blog explores the use of blockchain in the real estate industry and some of the potential real-world examples that are taking the industry by storm.
Benefits of Blockchain for Infrastructure Building
The real estate industry is ripe for disruption, and blockchain can provide the necessary means to spearhead this transformation. Some of the key benefits of blockchain in the real estate industry include the following:
1. Increased Transparency and Accountability
The blockchain uses a distributed and open ledger to allow secure, transparent, and tamper-proof record keeping. This makes it ideal for construction projects involving multiple suppliers, contractors, and stakeholders. Unfortunately, the current system for billing and payments is mostly manual, slow, and vulnerable to fraud.
With blockchain in real estate transactions, it is easier to track ownership, understand end-to-end payments made, and follow the transfer of title or any changes to the property records. This reduces the chances of fraud, providing greater confidence to buyers and sellers involved.
2. Improved Efficiency and Cost Savings
Another benefit of blockchain in real estate is its improved efficiency and cost savings. Several parties are involved in any infrastructure development project, such as builders, vendors, laborers, and other stakeholders. The current system is often slow and cumbersome and involves multiple bureaucratic tasks.
The blockchain can introduce smart contracts, making it live for all parties involved while making the maintenance of the ledger safe and streamlined. This ensures that real estate processes are accelerated, supply chain issues get streamlined in real-time, and there are no tampering risks.
By increasing productivity, maintaining accountability, and streamlining processes, blockchain technology in real estate can help implement industry 4.0 standards in the construction and infrastructure development industry.
3. Enhanced Security and Privacy
One of the biggest challenges to building trust in real estate and infrastructure development is the involvement of several third parties and vendors.
In addition, contracts are often misleading and full of issues that can lead to delays or complex documentation processes. Using live and smart contracts in the blockchain can help breach this barrier and improve compliance with regulatory requirements.
The public nature of the ledger also ensures that contracts are easy to access and safe from breach or unauthorized access, making it secure and transparent for tracking and verifying real estate contracts.
4. Streamlined Compliance Management
The real estate industry has always been subject to a wide range of regulations and compliance requirements, which are complex and challenging to manage. Blockchain can help to streamline compliance management by providing a secure and transparent platform for tracking and verifying real estate transactions.
Blockchain technology in real estate also has the potential to introduce new investment opportunities. By creating tokenization of real estate assets, more people can invest in real estate and build more trust in the system, creating a liquid market for real estate investment.
Blockchain in Infrastructure Building: Applications and Examples
With so many benefits, the use of blockchain in real estate is already a topic of discussion within the industry.
Due to the need for more digital and transparent processes, blockchain in real estate recent developments can be seen in the following areas:
1. Supply Chain Management
One of the top use cases of blockchain in real estate is supply chain management, which is currently complex and involves several intermediaries.
Blockchain can be applied to enhance supply chain processes by providing a decentralized platform to track and verify the movement of goods. The transparent nature of the supply chain ledger also ensures that it reduces chances of fraud, spotting errors, and identifying causes of delay.
2. Asset Tracking
Like supply chain management, asset tracking is critical in infrastructure building, where firms must manage equipment and machinery. However, this can often be challenging, and with the involvement of multiple stakeholders, it can often be difficult to plan.
Blockchain technology is used to track assets, providing a tamper-proof and transparent ledger of asset ownership, location, and maintenance history. This improves asset management efficiency and reduces the risk of asset theft or loss.
3. Energy Management
When it comes to any infrastructure project, enormous energy consumption and usage must be managed appropriately to reduce costs and minimize environmental impact.
Blockchain technology is being applied in energy management by creating decentralized platforms for managing and optimizing energy consumption. This can lead to cost savings and reduced carbon emissions while providing a more reliable and secure energy supply.
4. Land Registration
Land registration is a crucial real estate process involving several bureaucratic processes. By adopting blockchain technology in this area, land registration can be decentralized, making it easy to record and verify land ownership and transfers.
This also improves the accuracy and efficiency of the registration process and reduces the risks of fraud or errors, which are rampant in the industry.
5. Smart Contracts
A smart contract is a self-executing and transparent contract that comes with the terms of agreement written into the code.
This ensures that the contract can be easily customized, making it hard to falsify or modify any information. It also automates various operations in the infrastructure industry, such as payments processing, asset transfers, and contract execution.
By offering its ability to digitally encode and store contracts, blockchain makes real estate investment safer and transparent and protects all parties from falsifying, modifying, or destroying contracts.
The use of blockchain technology in real estate has the potential to completely transform the industry by providing secure, transparent, and decentralized platforms for various operations.
As this technology continues to evolve, the likelihood of it being used for additional and more innovative use cases in real estate is significant. While supply chain management, asset tracking, smart contracts, and payments are areas it can disrupt in the near future, many more opportunities are waiting to be tapped into.