Commercial real estate and financial industries are buzzing about blockchain and its potential impact on how data is shared. While the buzzword seems to be all around us and continues to make headlines, many people don’t understand the implications and how it may affect the way we do business in the future.
We’ve selected a list of 8 articles on blockchain and commercial real estate to help you better understand potential use cases and implications.
Blockchain has the potential to disrupt many processes within real estate. From accounting to title business and contracts, the blockchain will be omnipresent. Take, for example, the chain of custody and ownership of real property. Today we use a title company to research the records and give us assurances that the documentation available indicates ownership. With the introduction of a public open ledger system, the blockchain, custody of property, and the need for a secondary central repository (be it a title company or city and state public records) would not be needed. This would reduce transaction costs, state and city costs for hosting this information, and legal work associated with the research needed to transact on property.
In its most simple sense, the blockchain is a series of computers (thousands to potentially millions of them) that each keep the same record of an event or transaction in a ledger that is open to the public. Each record is encrypted, and the ledger is virtually hack-proof. Since all these computers see the same thing, they offer consensus that the recorded event or transaction is valid. The most important value of the blockchain is that it allows two or more parties to interact with, say, a financial transaction, with no middleman.
So this blockchain thing it’s all over the place, and there is so much hype and hyperbole.
Once you get past all of that BS, you get the nerds who want to sit and talk about forks being forks and other forks that won’t be forks. Don’t understand that? That’s ok; you don’t need to.
Blockchain technology has recently been adopted and adapted for use by the commercial real estate (CRE) industry. CRE executives are finding that blockchain-based smart contracts can play a much larger role in their industry. Blockchain technology can potentially transform core CRE operations such as property transactions like purchase, sale, financing, leasing, and management transactions.
The infiltration of blockchain, the technology that supports cryptocurrencies like Bitcoin, into industries around the world is only a matter of time.
The historically traditional commercial real estate industry won’t easily escape.
The technology has the potential to transform the property business. The potential shake-up would significantly speed up transactions and increase transparency.
The inevitable convergence of blockchain and real estate may be viewed as a modern-day example of the classic confrontation staged when an immovable object meets an unstoppable force. On the one hand, real estate — an industry as old as mankind — is notoriously resistant to change, and seemingly allergic to adopting new technology. On the other hand is blockchain — touted in headline after headline as the greatest innovation since the Internet, and promising no less than to revolutionize the way the world conducts business. As is typically the case, the truth most likely lies somewhere in the middle.
Over the last five millennia, little has changed in the way we transact real estate. From listing a property to closing the deal, multiple stakeholders, data sources, service providers, regulators and government agencies take their place between sellers and buyers, contributing friction, paper, redundancies, errors, waste delays and costs.
Adoption of blockchain is on the rise in commercial real estate (CRE) as industry players see how it can be used to develop smart contracts that can drive significant transparency, efficiency and cost savings in core CRE operations. “In particular, property transactions processes involving leasing, purchasing and sales are well-suited to benefit from blockchain,” observes Bob O’Brien, Global Real Estate & Construction leader, Deloitte & Touche LLP, citing the Deloitte Center for Financial Services report, Blockchain in Commercial Real Estate.
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