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Setbacks of the Blockchain Applications in Real Estate


btcmanager.com 14 July 2022 08:23, UTC
Reading time: ~4 m

Due to the potential of blockchain technology to transform the way real estate business is done, many investors and entrepreneurs are starting to understand the technology’s importance in the industry. However, it is still early in development, and full adoption of blockchain in real estate is still not possible. Here are some of the setbacks of the blockchain application in real estate.


The complexity of international regulations surrounding blockchain technology is a key issue that policymakers and the public need to address as the technology grows.

Some real estate investment platforms that operate on blockchains do not allow US residents to participate in their operations. The regulations surrounding the sale and trading of cryptocurrencies can be very strict, leading to additional administrative expenses. It is also easier for these platforms to prevent Americans from investing in their operations.

Not every country and state has recognized smart contracts as legally binding. It means that parties that may not have been aware of this may find themselves in a legal bind regarding contracts involving large sums of money.

Due to the complexity of the regulatory environment surrounding blockchain technology, many enterprises are not yet ready to adopt it. Despite the progress made in this area, more work is needed to make it easier for them to adopt it.

Lack of Blockchain Developers

Due to the increasing number of people working in the blockchain industry, there is a shortage of skilled and experienced individuals who can develop and manage the complex nature of peer-to-peer networks. It is why the industry must continue providing the necessary training and education to ensure its employees are equipped with the necessary knowledge and skills.

The number of jobs in the blockchain industry has increased by around 2000% since 2017. Having a sufficient number of developers is a concern for the industry.

Despite the technological advancements in blockchain technology, it is still in its infancy and not yet widely used. This move will take time for the developer community and educational institutions to adopt. For instance, while the market demand for blockchain will eventually increase once students complete their training, the results will not be immediately visible.


Every year, there are millions of real estate transactions around the world. These transactions require networks that can handle large volumes quickly and efficiently.

Currently, Bitcoin and Ethereum only handle around five and 15 transactions per second, respectively. Large-scale real estate firms that require fast processing times might experience transaction bottlenecks. Visa claims that it can process over 24,000 transactions every second.

According to blockchain startup Ripple, its token, the XRP, could process 50,000 transactions per second, roughly double the amount of Visa. It also noted that it already processes up to 1,500 transactions per second, which suggests that the slow transaction speeds are not inherent to the blockchain approach.


Due to the number of blockchains, there is a lack of interoperability and standardization in the blockchain industry. It is a challenge that all of them should address.

A rental company might want to use the public blockchain to perform lease contracts but would also prefer to keep its data on a private blockchain. This scenario can be considered a hybrid solution, where an organization decides to use one blockchain for its needs while exploring other options.

The second blockchain would need to be able to maintain the past transaction histories of its users. Unfortunately, this is not possible due to interoperability issues.

One of the organizations working on this issue is Interledger, which is trying to create a protocol that would allow cross-chain payments to be made using blockchain networks. However, while a solution to this issue is desirable, it is not yet feasible on blockchain platforms.

Widespread Adoption

Despite the technological advancements in blockchain, most people still don’t understand what it is and how it works.

Despite the widespread availability of blockchain technology, it is still not widely adopted in most industries. For instance, in the real estate industry, it will be a while before most companies feel confident that they can fully utilize it.

Early adopters have an advantage over those who are still behind them until the time when they can catch up. This move can create opportunities for new entrants and industry leaders.

Final Thoughts

Despite the progress that blockchain technology has made in the past few years, there is still a long way to go before it reaches its full potential. Many issues that remain to be resolved are related to the general public’s understanding of the technology.

Due to the nature of blockchain technology, it has to overcome the negative image it has received from the speculative nature of cryptocurrencies. Some projects, for instance, are already known to be fraudulent.

Despite the potential disruption that blockchain technology can bring to various industries, such as real estate, it is still unclear how it will affect the traditional industry. With the governments and industry leaders exploring the use of blockchain in real estate, it’s possible that this sector could be one of the first to adopt this new technology.

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