Blockchain is About to Change Your Future
Here’s an attention-grabbing headline from a recent post in Cushman & Wakefield’s Boston Blog: “Why Blockchain Will Change the Real Estate Industry Forever.” What person who’s involved in commercial real estate could resist reading further? Not me. I jumped right in.
The post invites readers to imagine the following:
- Totally electronic, secure property sales – free of paper deeds and title fraud.
- Digital leases that automatically withdraw rent payments and service charges with full audit trails and no human error
- Self-governing accounting systems with transactions automatically balanced and recorded minus fear of manipulation.
- Secure electronic records tied to each corporate or individual identity, including credit history and other details.
- Commercial buildings where every system is securely connected and adjusts to the needs of its occupants, without human intervention.
Sounds like some wild-eyed Silicon Valley daydreamer, right? But it isn’t. Major businesses like IBM, KPMG and Deloitte are on board. Soon – very soon – all the above “what ifs” will likely be part of your everyday business reality. And you’ll have blockchain technology to thank.
Blockchain Basics – An Introduction to a Game Changer
What is this strange-sounding technology, you may be asking. Take a look at the basics.
Blockchain is described as a digital ledger of economic transactions of all kinds.
Think of it as a new kind of database. A blockchain digital record contains pieces of information known as blocks. And here’s where the chain comes in. All those blocks of information pertaining to a transaction are linked together with code. A blockchain record for a deed, for example, would include all the relevant pieces of information about that transaction, which could be constantly updated as needed.
Why is there so much interest in blockchain technology? Security is playing a big role. Because each block is encrypted and linked to each succeeding block in the chain, it is difficult to hack without a staggering amount of computing power. Blockchain may seem to be just another database, but the key difference is that it’s distributed not centralized. There are multiple copies of each information chain. A hacker can tamper with one single chain of information, but the duplicate chains are structured to recognize and reject bogus alterations. In addition, blockchain-based solutions allow authorized users to access information simultaneously, facilitating collaboration and saving time.
Blockchain and CRE: Perfect Together
That Cushman & Wakefield blog post that caught my eye reports on a couple of basic commercial real estate functions on target for blockchain-based tech solutions. One of the first, the blog post indicates, will be blockchain-driven electronic property registers, already nearing release.
Title transfers and liens, too, are well-suited to blockchain-based tech tools. So is the escrow process. All these transactional basics can be handled securely and efficiently with this new technology. Paper as the medium for deeds, deposit records and titles is edging toward obsolescence. And intermediary functions may ultimately face elimination. And what comes next? Mortgage applications? Contracts? The door is wide open.
You May Not Even Notice When the Future Arrives
Those of us who are involved in the technology that makes commercial real estate function securely and efficiently (like the IBS team) are excited about the potential of blockchain. But to other industry professionals the inevitable transition to new blockchain-based tech solutions will be seamless and not readily apparent. You’ll just find your work easier, your overhead lower and your transactions more secure. That sounds like something to look forward to, doesn’t it? Stay tuned.