BLOCKCHAIN BASED SMART CONTRACT MODEL FOR REAL ESTATE MANAGEMENT

Abstract

Industries worldwide are facing a technological revolution where there is a need for technologies that can speed up business processes with more safety and transparency. The real estate industry is among many other industries that would benefit from such technologies due to the magnitude of financial transactions handled. The current management strategy employed by real estate owners depends on a number of intermediaries, including brokers, agents and banking service providers. This strategy of operation results to inadequacies within the real estate industry that cause problems such as lack of transparency, high transaction costs, personal biases, tax evasion or under taxation, landlord versus tenant conflicts and slow transaction processes. This thesis examines the potential of implementation of blockchain-based smart contract technology in the real estate industry and how it might resolve the inefficiencies within the industry. Blockchain is a new and emerging technology with the potential for implementation in various industries. Previous research in blockchain technology has concentrated on its potential application in digital currency. In this study, the researcher endeavored to design, develop and validate a blockchain-based smart contract model for management of real estate property that would address the weaknesses of the existing management models and potentially reduce the housing cost by elimination middlemen in the management process. To achieve the study objectives, a proof of concept (POC) methodology was adopted to prove the concept of resolving the weaknesses of the existing models for real estate property management using a blockchain-based smart contract model. The proof of concept was carried out in four steps namely planning, designing, implementation and improvement (PDIOI). The POC focused on coming up with a Solidity Smart Contract Based on Ethereum Model for Housing Industry available at grandmullah.github.io/real-estate. To demonstrate blockchain transactions the researcher created a cryptocurrency ―EToken‖ that would be used as a medium of exchange. The researcher also acquired test ethers from Ethereum Rinkeby faucet for paying transaction validation fee. The smart contract model was able to transfer ETokens from tenant account to the landlord account. All the transactions were recorded in blockchain distributed ledgers upon successful validation, and the entire Ethereum network users would view allowing transparency and integrity of transactions. As a generalisation and extension into other domains, the researcher noted that a blockchain-based model is important in any organisation that values historical transactions such as organisation which provides financial service. As a recommendation for further study, research can be extended to creating a completely blockchain-based version of electronic real estate transaction records, including land registry, or real estate ownership transfers.