Natalia Karayaneva is the CEO of Propy, a serial entrepreneur, a blockchain and real estate developer, and advisor to Arrington XRP Capital. She has also been a contributor to Forbes magazine since February 2019.
In her Inman segment, she discusses whether cryptocurrency will become the new transaction medium of real estate.
What is Cryptocurrency?
Cryptocurrencies such as Bitcoin and Ethereum are virtual currencies. They’re pretty much like digital versions of dollars that you can use to pay for real estate and other goods. On the other hand, blockchain is the ledger, the database that is being distributed and it is immutable. It provides transparency.
Cryptocurrencies like Bitcoin and Ethereum run on their own blockchains, so they’re secure. In Propy, Natalia says, they use blockchain technology in their backend to make their products transparent and immutable.
She also shares that they’re preparing for their next wave of consumers, such as millennials, who don’t want to go to banks. They want to make a few clicks and buy any good they can, online. Interest in the home buying process in particular is declining for the younger generations. At Propy, they are looking into automating the purchase process to eliminate the hassle.
They’re trying to make it as easy as buying books online.
The Amazon of real estate
Propy, Natalia shares, is looking into becoming the Amazon of Real Estate. Without a transaction platform, the buyer can electronically sign the purchase agreement online, communicate with their agent, the seller’s agent, and with a title company. Propy, then, provides the payment instructions and the consumer or the end user receives the evidence of the deal – the title.
Kylie mentions that the current process is slow and laborious. It’s just inconvenient. At the moment, there’s a lot of scamming going around, deposits… trying to capture that information, and etc.
The majority of real estate transactions are done through email, AKA the oldest protocol ever, so the hacking process is really easy. In the US alone, there is over $1 billion lost due to wire fraud.
With cryptocurrency, and Propy by extension, that lack of security is avoided.
One of the really cool things about blockchain is that it breaks the transaction down into lots of little pieces of data then puts them all back together at the other end. It’s all scrambled, so while the data is in transit, it can’t be hacked.
It also means that if you live in the US and want to buy property in London, you don’t have to convert your US Dollars to UK pounds, you can actually have that be a part of the cryptocurrency or blockchain transaction.
As for the legality of the transactions, Natalia shares that when end users receive their purchase agreement, or the offer to sign, the agreement is stored and hashed. The hash then is put on the hash of the document onto the blockchain.
Hash by the way, is an encrypted string of numbers and letters. It has a fixed length so no matter how long the data you enter is, the result will always have the same length.
So, if something happens in the future, or if the title or deed is lost, then the blockchain serves as evidence of ownership. Many governments recognize it as evidence in court.
The future of cryptocurrency and blockchain
Crypto and blockchain is a very new technology that still has a long way to go for people to start adopting it. Two years ago, the resistance was tremendous. Many agents were asking if property transactions using cryptocurrency was even legal at all. To even start, an MOU (Memorandum of Agreement) was required with a Minister of Justice.
But once the first steps were underway, the procedures and processes that came after were easier.
Propy has had amazing feedback from leading brokerages in the US and in the UK as well. CEOs want software to help agents do more transactions efficiently rather than hire new people as well.
As for us, we’re excited to see how it will look moving forward and we think crypto has great potential in the industry of real estate.