Imagine buying real estate using crypto – that future is here.
As blockchain evolves, there are more and more uses for the technology being developed, one of them being real estate. Today, buyers and sellers are using cryptocurrency to pay for properties, which is just the beginning. New uses are constantly being developed, but security always remains a primary concern. Escrow in crypto transactions, namely high-value transactions such as real estate, offers a secure solution that gives parties confidence in the safety and success of their transaction.
Transacting property on the blockchain.
Blockchain and smart contracts make it possible to securely record the sale and title of a property without the need for a title company or solicitor.
Imagine if there was one single record of title that couldn't be corrupted, easy to transfer, and always stated exactly who the current owner of a property is. That's the solution that blockchain provides.
But how realistic is this future of simple buyer to seller real estate transactions? Can we forgo some of the essential legal checks and balances used to protect parties in a transaction? In the end we are talking about the purchase of real estate, perhaps the most expensive and significant purchase for all of us.
Blockchain challenges solved by crypto escrow.
If you're unfamiliar with cryptocurrency or NFT transactions, it's important to know that 99% of all crypto transactions are exchanged wallet-to-wallet. That means there's no 'middleman,' just a direct sell. The problem this poses for high-value transactions such as real estate is that when a transaction is processed, it's final and irreversible.
Final and irreversible means that a record of the sale is made that cannot be unmade. It's easy to envision the difficulties that could pose when it comes to securely transacting titles or even accurately tracking a property's title. The consequences of a property’s title being erroneously or prematurely transferred could be disastrous. For example, in 2021 alone, crypto scammers took over $10 billion.
With fraud still flooding the crypto market, it’s easy to understand why real estate buyers and sellers are hesitant to use this technology. When transacting real estate, parties need to have trust in the process and the security of the sale.
But there is a problem, just as significant. Solutions that allow recovery of crypto are enterprise solutions (see federated solutions like private blockchains) where a third party holds the keys (custodial) and liquidity depends on their ability to manage themselves "correctly". Great examples from the last few months are FTX and Celsius, companies that held vast reserves on behalf of customers and seemingly collapsed overnight. So as long as crypto cannot be recovered or is in the custody of a (shady) third party, the issue of trust will not go away.
An escrow solution for high-value crypto transactions.
Despite the advancements that blockchain represents for real estate, escrow still holds a vital role in real estate transactions. A non-custodial payment gateway, such as Mellifex, provides a unique solution for high-value crypto transactions, such as real estate.
Mellifex’s escrow operates as a neutral party that holds people’s crypto on a dedicated smart contract under their control. During the escrow process, transactions are still fully reversible if one of the agreed terms is not met (just like a traditional real estate escrow). Mellifex operates as a payment gateway with an affordable revenue model charging between 0.1-1% of a transaction, and no additional payments are required. That means that the cost of escrow is clear, with no hidden costs for the parties involved.
Mellifex is creating a system to build trust back into crypto transactions.
While blockchain technology is reshaping the real estate industry, we still need to ensure that crypto payments are processed securely. Mellifex is a trusted and secure solution backed by the Blockchain Arbitration & Commerce Society (BACS), meaning that all transacting parties are well protected.
Finally, do you need to process escrow? Here you go; the safest solution out there.