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. In its simplest form, blockchain is a distributed database.
By recording and combining transactions into a de-centralized, secure ledger system, it creates a “chain” of chronological data that no one party has control of.
The value lies in the system’s ability to authenticate and track transactions in real time without the use of a third party, such as a bank. The technology has the potential to transform the property business. The potential shake-up would significantly speed up transactions and increase transparency.
“People are brainstorming new ways of using it so that they fall on the right side of this business disruption,” according to the DBRS research report How Blockchain Technology Is Rebuilding the Commercial Real Estate Industry.
Smarter, more transparent One of the biggest impacts of Blockchain on commercial real estate would be a smoother, faster contract management process that expedites deals. With smart contracts, every part of a lease or sale agreement is automated, and payments are received instantly – even outside of business hours.
Blockchain would make it possible to “create, authenticate and audit contracts in real-time, across the world and without intervention from a middle man,” said Nick Clare, Head of Project Management, JLL UK. Smart contracts “have instructions rooted in the transaction so that payment can only be taken as long as the instructions are fulfilled, providing complete transparency to all parties and reducing the likelihood of payment disputes.”