Recent developments in the crypto world include Bitcoin and altcoins hitting a new all-time highs, regulatory talks that may impact the industry heavily, and more institutional interest. Since then, developers have been exploring and creating new crypto projects all under the names of Ethereum, Bitcoin and other cryptocurrencies. In fact, the interest in cryptocurrencies has exploded this year, not only among investors but also among generation z and millennials.
According to an industry pundit, who is the head of global development at the famous cryptocurrency exchange Gemini, thinks that the first six months of 2021 have been a watershed year in a number of ways.
The data from PitchBook indicates that venture capital firms have invested approximately $17 billion into companies working with cryptocurrency and blockchain. The total is above that of 2020, a record figure.
Several important capital raises have occurred only in August. With the $90 million Series C round of funding, CoinDCX, the India-based cryptocurrency exchange, now has a market value of $1.1 billion. In just eight months since CoinDCX’s $13.9 million Series B raise, the crypto exchange has become the first unicorn in India.
A crypto-powered wireless network company called Helium Network recently announced a $111 million token sale led by Andreessen Horowitz, and the digital asset trading platform FalconX reached unicorn status after a $210 million Series C raise valued at $3.75 billion.
Although the sector has been subject to increased scrutiny from global regulators and politicians in May and June, investor demand has been considerable. In this way, the crypto industry is demonstrating its growth, maturity, development, and unique investment prospects.
Bitcoin, in its infancy, seemed to be the opposite of what institutional investors usually invest in. But in 2021, more institutions have been diversifying their portfolios and allocating to a wide array of digital assets companies. Nowadays, digital assets are universally recognized as having great growth potential.
Due to this growth in the crypto market, cryptocurrency banking has become more popular. In this article, we will focus on the crypto banking industry and explore what kind of impact it will have on the real estate sector in the near future.
By contrast to the numerous crypto businesses, crypto banking is the practice of introducing digital currencies to the market to make them tradable or transact-able. Crypto platforms can be created that allow the storage and holding of virtual assets. A crypto bank is an online platform for applications. Users can remotely access their digital wallets and make payments through just a few clicks while logged in, and these transactions happen instantly.
Thanks to the blockchain, crypto banking has many advantages over traditional banking methods. In crypto banking, transaction costs are low and payments can be made almost instantly and worldwide.
With cryptocurrency banking, people are able to transact financial transactions using biometrics and a mobile phone and therefore become more prosperous.
Crypto banking has the key characteristic of being unable to change the data recorded. Blockchains enable you to track any data in real-time, leaving a highly detailed audit trail. By doing so, it eliminates the act of handling errors and reconciling information.
Apart from this, crypto banking has a lot to offer the global community and can truly bring a revolutionary change to many sectors.
The upheaval caused by cryptocurrency banking has not spared the real estate sector. Real estate transactions have never been conducted exclusively through digital channels before. In real estate transactions, various players engage in face-to-face transactions. In contrast, crypto banking paved the way for a paradigm shift. Cryptocurrencies like bitcoin, ether, and stablecoins now have access to real estate through trading platforms. This includes the development of smart contracts, which provides the necessary infrastructure for exchanging digital currency with other types of investments.
Thus, cryptocurrency banking can make a significant impact on real estate industry, let’s explore a few of them below:
In the world of real estate, tokenization simply means the digitization of financial instruments, securities, and other assets. In addition to ownership rights, crypto banking technologies enable asset issuance, distribution and transfers to be regulated and compliant. Digital assets can include transaction histories and ownership rights. As an example, controls are used to prevent tokens from being transferred to unauthorized counter-parties, or not at all during the lock-up period.
Digital assets are suited to meeting the needs of all issuers. This allows companies to provide new services, like splitting profits or giving dividends, as well as tokenizing their products and their customers’ payments quickly and at a lower cost. Customization and rapid issuance for digital assets allow issuers to directly cater to the needs of investors, reducing counter-party risk significantly.
Having reduced costs makes it possible for issuers to lower the initial investment requirements and expand their investor base. Secondary market opportunities and liquidity are improved as digital assets become more connected to associated networks. Crypto banking can provide a future with new instruments and markets to both issuers and investors.
Real estate ecosystems include brokers, lawyers, and banks. According to a report by Deloitte, blockchain (using crypto banking) could soon change the role of real estate brokers and agents. Listings, payments, and legal documents can eventually be handled by new platforms. Cutting out the middlemen will allow buyers and sellers to pay less in commissions and fees as they will save on the fees and commissions they normally pay. If middlemen are cut out, buyers and sellers will be able to save money by avoiding paying the typical fees and charges for dealing with intermediaries.
Real estate has long been viewed as an illiquid asset since it can take time to close a deal. The case with crypto banking tokens is different since they are theoretically easily traded through exchanges for fiat currency. In contrast, real estate can readily be traded as tokens. If the seller wants some value from their property, they do not always need a buyer who can afford the whole property. Fractional ownership can help solve this problem by dividing a real estate property into buyable fractions which can also contribute towards increasing the property’s worth.
Real estate investing can also be made easier with crypto banking because fractional ownership is permitted. A large sum of money would often be required upfront to acquire property in an investment. As an alternative, investors might pool their money to buy larger-ticket properties. Crypto bankers could easily purchase and sell fractions of tokens through a trading app using their phones. As well as providing the benefit of not having to manage the properties themselves, fractional ownership also reduces the costs associated with maintenance and leasing.
Maintaining a property alone can be expensive, and dealing with tenants might be challenging. Similarly, lending activities can also be affected by this, since property owners have to put their homes as collateral for loans in order to secure quick cash. A property owner may also continue enjoying use of his or her property if the terms allow for it.
The decentralized nature of blockchain makes it a highly trustworthy technology. By storing data on a blockchain, all peers in the network can access it, making the data transparent and immutable. To see how institutions’ greed and insufficient transparency have catastrophic results, look no further than the 2008 housing bubble crash. There is built-in trust in crypto banking systems. Due to peer verification, buyers and sellers can feel more confident about transactions when comparing information. There would also be fewer attempts at fraud. As a result of Vermont and Arizona passing legislation allowing smart contracts, they are increasingly becoming admissible records. Smart contracts would, therefore, have a greater enforceability beyond their technical aspects.
Moreover, a crypto banking network makes real estate transactions more affordable, since everything is fully visible. You can cut away middleman commissions and fees to lower inspection expenses, registration fees, loan fees, and taxes that are connected with real estate. Depending on what territory has jurisdiction, these costs vary even more. The advent of platforms automates these processes, eliminating intermediaries or even making them part of the system, which reduces or eliminates their need.
The cryptocurrency banking sector has a significant impact on the real estate market. It would result in the removal of intermediaries, an increase in transactor confidence, the system’s function as a record keeper, the acceleration of contracts, leases, and transactions, as well as a reduction in fraud and expense.
Additionally, there are hundreds of trillions of dollars worth of real estate globally, yet the wealthy and big companies control the most of it. Through the usage of crypto banking, more individuals may have access to a market where transactions are more transparent, secure, and fair. Crypto banking being the primary method of peer-to-peer transactions may be a significant facilitator of future real estate deals.
Although crypto banking has been applied in a number of real-world settings, we are still a long way from realizing the full potential of crypto banking in real estate. The innovations happening in the crypto banking sector has positive implications for the real estate sector, and may boost the sector to new heights thanks to the influx of new investors and new products made possible through crypto banking.