Crypto assets have successfully penetrated every nook and corner of the mainstream financial world, compared to a few years back. As time goes by, more sophisticated financial instruments have emerged.
Since 2021, discussions surrounding Decentralized finance [DeFi], non-fungible tokens [NFTs], decentralized autonomous organizations [DAOs], and Web 3.0 have dominated the conversations.
On the other hand, the potential for bitcoin and other crypto-assets in playing a role in the mortgage and broader debt-collateralization space remains an underrated topic.
During the last several years, prices of real estate skyrocketed, bringing back the memories of the 2007 housing bubble burst. Now with blockchain gradually making inroads into the traditional market, this has opened up ample opportunities for crypto and real estate to work together in transforming the housing sector.
How crypto would shape the real estate sector?
Blockchain technology provides a huge opportunity to the real estate industry in a variety of ways, including offering a new means for buyers and sellers to connect with one another.
Also, it could be used to cut intermediaries out of the transaction process, thereby reducing costs.
This technology could further scale up the practice of fractional ownership of the real estate. Typically, such investments require huge money upfront. Through blockchain, investors would simply access a trading app to buy and sell fractions of tokens as they see fit.
Additionally, fractional ownership would also help them avoid managing the properties themselves such as maintenance and leasing.
That said, as cryptocurrency matures, mortgages secured by these asset classes seem the next logical step. Although it is still a niche area, the convergence of crypto assets and mortgage financing is no more a futuristic pairing.
Real Estate firms boosting crypto adoption
In April 2021, the largest e-commerce player in Latin America, MercadoLibre, unveiled a bitcoin-only real estate section within its platform for trading properties with digital assets.
This year, US Real estate development firm Harbor Custom Development Inc. has started accepting bitcoin as payment for its listed land, developed lots, residential homes, condominiums, and apartments in four U.S. states, according to a press release.
A few days ago, Dubai-based luxury real estate developer Damac became the latest to join the cohort in welcoming crypto payments.