If you believe Blockchain isn’t the biggest thing to hit real estate since the invention of the key, you may be the only one. Research firm Deloitte, not known for its effusive nature, waxes positively enthusiastic about the technology in its report “Blockchain in Commercial Real Estate: The Future is Here”.
“A significant portion of… digitized information is hosted on disparate systems, which results in a lack of transparency and efficiency, and a higher incidence of inaccuracies that creates a greater potential for fraud,” the report reads. “Blockchain technology… could enable the CRE industry to address these inefficiencies and inaccuracies.”
What is Blockchain Exactly?
So what is Blockchain? It’s a list of records known as blocks, which are linked through cryptography. Publicly readable blockchains are typically used by cryptocurrencies, with private blockchains supported for the use of businesses.
In other words, it’s a “trusted general ledger” as described by MIT Center for Real Estate head of industry relations Steve Weikal to RealCrowd.
“In a building, all the information… can exist in one digital record, and that record is duplicated in hundreds, if not thousands, of nodes around the world.” In other words, that duplication makes the blockchain fairly impossible to hack. In CRE — as with just about every industry other than organized crime — that’s a good thing.
With that said, here are four things you should know about Blockchain’s confluence with CRE:
- It has the potential to completely disrupt the way that CRE does business. That’s not just hype — it’s the truth. “Not digital currency, necessarily,” Weikal said, “but just imagine how important it is in real estate to know where the money is, where it came from, who really controls it, who owns it, where is it stored, and when it gets passed off.” Mic drop.
- You’re also going to see the real estate purchase process go more fully digital given that one of Blockchain’s main assertions is fraud prevention. All paperwork in the process can be digitized — it’s simply a matter of security. Could real estate deals be completed more efficiency with Blockchain in your corner? What do you think?
- Foreign markets are even more ripe for Blockchain domination given that they aren’t quite as hung up on what Weikal calls “this archaic Western recording system”. In fact, this new technology holds the power to possibly revolutionize more nascent real estate purchase systems, such as that in the Republic of Georgia.
- Initially part of Bitcoin, Blockchain has expanded to hold viability in the more traditional business realm. Surprisingly enough, its influence in the commercial real estate industry may prove one of its more impressive feats. That’s because CRE is so relatively traditional and steeped in its ways — these are not early adopters. However, enough Millennials are entering the field that this is changing — rapidly. Millennials are not tech-averse — they embrace it, and so the industry is coming to embrace it as well.
This is just the tip of the iceberg. Conditions, always changing, are changing more rapidly than ever. CRE must keep pace.
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