The real estate industry is changing dramatically and real estate investors and developers are moving away from the traditional bank financing or even capital market instruments due to the current economic challenges.
Being one of the most famous emerging technologies of the last decade, cryptocurrencies like Bitcoin and Ethereum are also in spot of real estate transactions. Many of the real estate industry players believe that cryptocurrency will revolutionize the future of real estate transactions; and will be the cure to the industry’s liquidation problem.
We believe use of cryptocurrencies in real estate transactions will be more popular and customary because it is fast and less costly than traditional (wire) bank transfer. Although from a legal perspective, a transaction using cryptocurrency is the same as an all-cash transaction, cryptocurrency transactions are completed much faster due the blockchain technology; instead of writing a (blocked) check or wire transferring the cash between bank accounts, the buyer and seller exchanges cryptocurrencies between their own digital wallets less than a minute via blockchain technology. Proof of a payment is produced instantly and there are no additional bank changes for processing payments. Once the seller receives the purchase price, it would have two options; accept the digital currencies directly or convert them into USD. This instant payment mechanism would allow the purchaser to acquire title to the property instantly as well, where in the traditional system, the parties would need to wait until the funds are cleared from the bank (as less commonly used in Turkey) or the blocked cheque is cashed (as more commonly used in Turkey).
As a next step, market players are exploring the reliability, transparency and security of the blockchain technology as a viable option for recording title deeds and transfers during the sales process. In the USA, for instance, during all cryptocurrency real estate transactions, property titles are also issued and transferred to the purchasers by using blockchain technology and the transaction is completed simultaneously with payment of cryptocurrency.
We expect this trend to spread globally for real estate transactions allowing much faster and seemless procedures without the need to physically travel to relevant land registries. The banks are also attempting to catch this trend. Barclays Plc, Royal Bank of Scotland Group and 40 companies have announced that they started to convert their technology for cryptocurrencies to provide faster purchase and transfer service to their clients on real estate transactions.
Even though Turkish land registries are completely digitalized and there are means to complete real estate transfer remotely, Turkey is yet away from fully converting real estate transactions into blockchain technology. Nevertheless, despite lack of legislation or guidance there have been nine real estate transactions completed in Turkey using cryptocurrency up to date and hopefully many more to come.