So first of all..what is a smart contract?
In the blockchain space a smart contract is almost an autonomous program that runs independently on the blockchain and can process and read information coming from a blockchain and then write out information on to a blockchain. A smart contract has no access to the outside world or the general internet. A smart contract operates on and to a blockchain it can simply process information like who make payments and how much did they pay for example. Based on that information a smart contract is able to send out some kind of value like cryptocurrency and write information on to a blockchain.
So the blockchain creates a peer-to-peer relationship in whatever industry. If the smart contract is able to interface with a recieving entity without a trusted third party then you are really enabled some of the power a smart contract have. The big question is where is it really usable.
Thats just a quick and short overview whats possible through smart contracts.
How can smart contracts revolutionize the real estate industry??
The whole situation is about to change because of a wave of fintech start-ups all around the globe begin to disrupt the sector with blockchain technology.
It has the potential to combine the amount of property information which is stored in private and government databases via a single digital address which is stored on a public distributed ledger.
So can easily keep track of property including all legal and and the transaction history of it. That could revolutionize the industry by slashing legal, accounting and transaction cost as well as reduce the risk of fraud by simply removing the middlemen. Brokers, title companies or notary publics for instance would not longer be needed.
The functions of bitcoin already allows simple smart contracts for real estate. For example by implementing it for a secure escrow when renting an apartment. There is a german start-up called slock.it which allows rooms to be rented using smart contracts. When the payment is made the contract automatically unlocks the door for you.
The point of using Bitcoin, Ethereum or other cryptocurrencies is to remove middleman and eliminate points of failure or control as well and for that you don’t even need a permission from anybody to use the network.
It’s time for the sleepy real estate industry to wake up and use smart contracts for more efficiencies, fraud reduction and to keep in mind some cost savings as well.
I want to keep it short for the moment but I will go on with some other advantages in future posts.