In ancient times, the home was the place where people would gather, children would grow and safety could be obtained.
As we evolved technologically and economically, real estate became vehicles for investment, allowing savvy investors to create substantial wealth.
Yet fast forward to modern times and one of the problems that are facing Australians is the problem of 'affordability'.
The OECD’s price to income ratio index shows a 78% increase between 1980 and 2015 - and as of 2022, the disparity can really be felt, especially in the millennials demographic.
Back in the 1980s, the median income was ~$15,800 and the national average house was ~$40,000 - meaning house prices were roughly 2.9x the median income rate.This brings us to an important crossroads because the market forces that have had prices increase unequally compared to income growth, which in themselves would require an entire essay, demand innovation, adaption and change.
In 2008 the world saw the release of a blueprint for a new form of currency - 100% digital money that has become the perfect definition of modern Sound/Hard Money.
It had an unchangeable finite supply (21M), a programmed release schedule with progressive reduction built into it that projects all 21M of the total supply will be circulating by the year ~2140, and importantly, a consensus mechanism that prevents fraud or double spending - a problem that plagued digital currencies since the idea was first conceived.
This blueprint was for the blockchain protocol called Bitcoin, which you may have heard of by now.
Blockchain provides an immutable, efficient and secure way to record information and transfer value between two parties.
Some of the benefits are:
Blockchain commands trust and security as a decentralised technology.
As technology continues to evolve, legislation and regulations will also adapt to the times. The disruption of the real estate industry may cover many areas.
The Problem:
As mentioned earlier in this report, affordability has become a real concern for the average person.
The Solution:
According to surveys conducted by Kraken, roughly 1 in 5 Australians see crypto investment as the best path to homeownership - this is due to savvy investors being able to accumulate significant returns on investment, which enables them to purchase real estate, just like 23-year old Loi Nguyen did recently in Brisbane.
It doesn't just stop with generating funds for deposits or full purchases, soon people will be making payments using their digital assets, via platforms like ours, B4REAL.
Currently, the process of buying and selling real estate with crypto is tricky and time-consuming, which is why we created B4REAL to fill the void and enable buyers to pay in their desired crypto, get connected with our crypto-friendly lenders for the balance of funds, and sellers are able to receive settlement in their desired currency; such as AUD.
This is the future of real estate, seamless integration with the blockchain/crypto markets for easy payments.
The Problem:
Illiquidity, access for a diverse demographic of investors and speed of transactions can be a problem in traditional real estate deals.
The Solution:
Tokenization is a significant paradigm shift that allows assets to be traded much like equities on an exchange, and transactions may be completed online.
This allows sellers to tokenize assets, like real estate, essentially handling it like a stock sale, and liquidating that asset through a token sale using new-age platforms like ours will in the future.
The tokens may be traded for domestic fiat, such as AUD, with buyers obtaining a share in the property.
This is exciting for a number of reasons:
This is the future of real estate; seamless integration with the blockchain/crypto markets for easy payments and widespread accessibility - something we are very excited to be involved with and helping real estate professionals to adopt.
The Problem:
Some of the friction points currently come down to accessibility, time consumption and manual processes.
The Solution:
One of the core functions of blockchain technology is the storing of data in highly secure 'blocks' and the transfer of value - without 3rd party intervention.
The true beauty here is that as time goes by, we will likely see all the relevant data regarding properties brought onto blockchain tech which will enable the fluid storage and transfer of ownership rights to a property.
What could this look like?
Imagine having every relevant piece of data related to a property, stored in a token, that represents not only ownership of the said property but also all historical information about the property too.
Imagine this:
This will reduce costs, decrease margins of error and make transaction times infinitely faster!
Note: Worth mentioning here is that this particular level of disruption still requires deep thought in regards to implementation to ensure protection from unnecessary risk, unneeded complexity being added to the existing protocols and proper integrations with respective local government bodies.
The Problem:
High fees, time-consuming and error-prone manual processes.
The Solution:
Brokers, lawyers, and banks have long been an essential component of the real estate market.
According to a study by Deloitte, however, blockchain may soon shake up their functions and involvement in real estate deals.
A key attribute of blockchain technology is transparency and the democratisation of information, which means as we put more data into blockchain tech, the average person will be able to do even greater due diligence, at their own pace, in their own time.
In our opinion, this won’t remove certain intermediaries from real estate transactions, instead, it will likely:
You can program all aspects of a sale, from start to finish into blockchain tech, effectively making everyone's lives easier and making the process less time consuming and costly.
The Problem:
Currently, the process for foreign investors getting involved in new markets is filled with friction, chief among them is the headache of sending money across borders - something that is slow and filled with fees.
The Solution:
Making a payment with cryptocurrency immediately remedies this problem by allowing instant, low cost, borderless payments.
This means, for example, a family in India:
This is a tremendous improvement and a big win for all people wishing to purchase real estate abroad.
The Problem:
In traditional lending circumstances, certain buyers will be excluded due to not meeting pre-set qualifying criteria - in turn, excluding them from the real estate market.
The Solution:
Finally, the way that people secure finance for purchasing real estate will inevitably change with the onset of DeFi (Decentralised Finance), where they may be able to access standard crypto secured lending by large institutions or even more radical forms of lending such as crowd-sourced, peer to peer (P2P) lending.
What this means is that in the very near future, it could look like this:
This would streamline the process, decrease settlement times and make real estate more accessible to buyers who may not have had the ability to purchase in the past.
Worth mentioning here is that we have top tier lending partners who are excited about real estate 3.0, are willing to work with crypto and have their policies for doing so, which means as more people use crypto for their purchases, securing the balance as a mortgage is now a lot more simple.
The Problem:
As mentioned previously, affordability and accessibility for certain buyer demographics makes it near impossible for them to enter the real estate market.
The Solution:
Blockchain lowers the barriers to real estate investing by allowing relatively easy fractional ownership. Often, purchasing property requires the payment of a large sum of money, with fractional ownership, this barrier is removed.
Some benefits of fractional ownership include:
Additional implications of using blockchain to facilitate fractional ownership are:
As we release the B4REAL platform in stages, fractional ownership of real estate assets is an exciting stage that we can’t wait to release to the Australian market.
The B4REAL platform has the core functionality of facilitating real-world land and property transactions involving digital wealth.
Worth mentioning also is that via our existing partnerships alone, we have 25,000 listings committed to our platform per annum.
As of the time of writing this blog, B4REAL already can do some pretty cool stuff...
As we continue down our development path, the B4REAL platform will evolve into the only tool you use for anything to do with crypto/real estate transactions.
The complete digital transformation of the real estate industry with ground-breaking modern tech is going to open up new markets, create accessibility to people who previously were disenfranchised and make the buying and selling experience simple, convenient and streamlined for buyers, sellers and real estate professionals.
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