Blockchain technology underpins the much talked about Bitcoin – the leading cryptocurrency. If you’re not sure what blockchain is, then think of it as a permanent ledger used to record transactions. In addition to being user generated, it’s also tamper proof and therefore represents an unassailable record of proof. And its potential for use in the property sector are wide ranging.
Disrupting the traditional
While some developers are beginning to allow tenants to pay rental deposits in Bitcoin, other start-ups are using the technology behind it to disrupt the traditional sales techniques.
For example, ClickToPurchase is a site that allows clients to exchange legal contracts online. The idea is that it cuts out all of the months of hassle during the traditional sales process, which often leads to either the seller or buyer pulling out of the deal. It’s the only site that offers such a service and has so far hosted the exchange of legally binding contracts worth £200 million.
Further to its initial success, the company is now building its own blockchain. Its sales will be permanently recorded using this technology, and is needed for the increasing number of deals that the site is likely to complete. A representative said: “for the first time, property sales – actual legal transactions – will be recorded in a blockchain.”
Meeting international demand
London property developer The Collective, on the other hand, is using the cryptocurrency itself to make life easier for its customers. The pioneering force behind the idea of co-living, The Collective is adamant that there is a growing demand to accept cryptocurrency, particularly from international customers.
In a sector first, the developer announced that prospective tenants can now pay their deposits in Bitcoin in the UK. BY the end of 2017, they also plan to be accepting rent in cryptocurrency as well.
First decentralised currency
In the summer of 2017 Bitcoin hit a record high of $4,700 (£3,627). At that point it had risen a staggering 350% since the start of the year. Although it has dropped since, it’s still valued highly. However, as it’s also the first decentralised currency in the world, and therefore outside of the control of any bank or government, it’s essentially unregulated.
And while it’s becoming increasingly adopted globally, it’s not without its critics. They warn that it’s extremely risky and volatile and are predicting that its bubble will burst before long. Despite this, The Collective is happy to accept Bitcoin as a deposit. They have pledged ‘spot conversion’ of the currency, which means they will accept any financial risk while they hold the deposit and the tenant will get the original value back at the end of the contract.
Moving cryptocurrency to the every day
The rise and rise of cryptocurrency, led always by Bitcoin, is a sea change in the way that people perceive value and transactions. In the wider world, many investors and savers are becoming increasingly comfortable with cryptocurrency. This will lead to the expectation that it can be used to pay for every day essentials, including things like rent and deposits.
However, not everyone is convinced cryptocurrency is the future for property or any other sector. The Association of Residential Letting Agents (ARLA) said: “There may be niche parts of the market that would be willing to accept bitcoin in exchange for traditional rental income but electronic currency market is still in its infancy and the market will need to develop more before it becomes a mainstream payment method for rent.”
Barrier to popularity
Making Bitcoin more customer friendly is the biggest barrier in gaining acceptance for the cryptocurrency. While this may or may not happen in an uncertain future, it’s clear that the technology behind Bitcoin will be utilised in the property sector.
Expect to see other services utilising Blockchain technology as more transactions and business deals move away from the traditional and into the online world.