Blockchain is an emerging technology which will transform the way we buy, sell and lease real estate.
“A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order. It allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.
Originally developed as the accounting method for the virtual currency Bitcoin, blockchains — which use what’s known as distributed ledger technology (DLT) — are appearing in a variety of commercial applications today. Currently, the technology is primarily used to verify transactions, within digital currencies though it is possible to digitize, code and insert practically any document into the blockchain. Doing so creates an indelible record which cannot be changed; furthermore, the record’s authenticity can be verified by the entire community using the blockchain instead of a single centralized authority.” (1)
Real estate will not be passed over when it comes to the blockchain disruption either.
There will be a need for education in order to transition from the current standard analog norms into the digital space for high value assets such as real estate. Blockchain technology introduces smart contracts on its platform. This allows assets like real estate to be tokenized, and be traded in the same vain as cryptocurrencies, like bitcoin and others.
You will be able track all information on real estate, transactions, title registration, property encumbrances and their conditions can all be entered into distributed ledgers which are accessible online and through mobile apps. Each property would have its own blockchain ID, with all its technical characteristics specified. This makes it easy to access all the information for each asset, and know the data is current and accurate.
You will be able to access the blockchain for:
Tracking all operations of your commercial property: every system will be securely connected and will adjust to the needs of its occupants without human intervention;
Seeking information on potential clients: each corporate or individual identity will show their credit history and other details, when given access to the sellers;
Creating a digital lease which can be set up to automatically to withdraw rent payments and service charges with no human error and a full audit trail;
Creating a self-governing accounting system: each transaction is automatically balanced and recorded and cannot be manipulated;
An electronic, secure property sale: where paper deeds and title fraud cannot happen.
What this means is, there will be a complete reworking of how real estate is currently operating. Agents and investors will have access to more current, quality information. Escrow and title companies will have to adjust their service offerings if they want to survive. The transition will not be overnight, but it will slowly work its way into the way we operate in CRE.