Buying a home with Bitcoin and other cryptocurrencies could revolutionize the way brokers interact with customers in the near future.

Blockchain, the technology behind cryptocurrencies, could be configured to reshape the way brokers, lenders and clients interact in the real estate market in Australia, with open source software representing the next step in the interaction. in line.

The research saw real estate transaction times reduced from three months to three weeks in blockchain trials in the UK, showing the potential of transparent technology to speed up and decentralize processes.

“Blockchain is the next evolution of the internet,” explained Lachlan Feeney, CEO of Labrys, one of Australia’s leading blockchain developers.

Read more: Open Banking “tipping point” for the broker channel

“It’s an open infrastructure network where you can build applications that could be useful to the real estate and mortgage brokerage industry, but also generally. “

“There are thousands of computers running around the world. Today, an application that works on the Internet is hosted on a single server that is located somewhere at Google or Amazon: this is how the whole Internet works today. “

“What blockchain is, and what the whole Internet will evolve towards, is that instead of hosting it on a single server somewhere, it will be hosted on distributed networks so that your application exists and is duplicated on thousands of servers around the world. and when it is running and your users are using it, it is guaranteed to work every time. “

“It’s immutable, you can’t change it, you can’t hack it. It is a better way to store data, run applications, and communicate both person-to-person and computer-to-computer on the Internet.

Bitcoin, housing and decentralized finance

The potential for blockchain to disrupt the real estate market in Australia comes from several different angles, Feeney said.

“There are a few different angles that organizations in the blockchain space have tried to bring to the property space, but we’re still very early days and we’re still trying to find the best use cases,” a- he declared.

“One of the things we’ve focused on so far is the tokenization of real estate assets. In the blockchain space, you can tokenize anything, which means creating a digital representation of a digital asset.

“You can buy a property and put it in trust and then issue tokens against it on a blockchain system. If you issue thousands of tokens, you could reduce the investment to a few dollars per person, which would allow many people to gain exposure to real estate assets.

“There are big differences between what is technically possible and what is possible within existing regulatory frameworks, so these are the areas that we are still trying to navigate, but in this space the idea is that there is has this new technology that allows us to split assets down to small units and we just have to figure out how to make them available within the existing regulatory framework. “

“The advantage would be that you could get investors with small capital to invest in markets where traditionally there are fairly high barriers to entry. “

Crypto and real estate market

Buying a property using Bitcoin and other cryptocurrencies could also be another way the blockchain ecosystem intersects with the housing market.

“Another use case is that instead of trying to use the blockchain to represent the property itself, you can go the other way around and use the blockchain as the currency used to buy the property,” said Feeney.

“It could allow people to buy property in Bitcoin or other cryptocurrencies or through stablecoin, which are like digital versions of the Australian dollar.”

“There are a number of reasons why you might want to do this: The price of Bitcoin is quite high right now, close to AUD 100,000, so there are a lot of cashed-in Bitcoiners looking to buy a property and that’s more. easy for them if the seller is willing to accept Bitcoin purchases rather than cash them out first.

“Properties are now starting to sell in Bitcoin and other cryptocurrencies, and this can even be a marketing tactic to stand out.”

How to buy property with Bitcoin

“Another thing you can do when using crypto is to enter into smart contracts to develop blockchain-based escrow systems that can help lower the costs of selling property.”

“Instead of using a traditional provider, you can create a smart contract on the blockchain that takes the currency and locks it into a smart contract.”

“You can pay the deposit, and when other things fall into place, that money can be returned to the seller depending on the terms. There are a lot of things that can be done out there using blockchain based currencies.

“A third major area is what we have called ‘DeFi’, or decentralized finance. This is when you take out secured blockchain loans. One of the biggest blockchain lending protocols is called Compound – they are experimenting with using real-world property as collateral on their platform. “

“If you can verify that you own real-world property with Compound, they can use that as collateral and you can take out a crypto or stablecoin loan for the value of it.”

“It’s not yet fully available to the public, but it’s an exciting application in the space where real-world property is used on the blockchain.”