Blockchain And The Future Of Real Estate
In a recently published report by Cushman and Wakefield on the blockchain, bitcoin, and their effects on real estate, the corporate real estate mogul stated that “global spending on blockchain technology totalled $945 million in 2017. This amount is forecast to increase to $9.7 billion by 2021.”Even so, the adoption into the corporate real estate industry has been progressively slower to catch up on, with the first transaction being fully funded by cryptocurrency which happened in December 2017.
Most of the people working in the industry wonder how the same relates to interiors, but before we get started on the application of blockchain in design, let’s dive into the basics first. Blockchain works as a digital ledger where transactions are chronologically recorded. The history and cryptography are linked together and the database shared with everyone who is involved. Bitcoin, which is supported by this technology, is a kind of cryptocurrency which is also the first-ever decentralized digital currency.
Its concept is one-to-one, where the exchange or transactions happen between the parties directly, without the presence of a middle party. Crypto transactions are updated in the digital realm by a number of distributed servers in less to no time. These servers compare the data for the
Why is it so great?
- When you make transactions, the involvement of a payment processor is not necessary, which makes it cost effective i.e. the fee for each transaction is zero to negligible.
- When making a donation, or buying a product which does not require shipping, blockchain does not require personal details, making virtual transactions easier and efficient to take place.
- It prevents fraudulent payment chargebacks and reversal risks for industries.
Therefore, blockchain is seen as having beneficial and palpable applications in real estate transactions. Moreover, its applications are equally as advantageous to the property management, project management and design industry. Senior product manager at Mace, a blockchain advocate, and a lean thinker, Brittanie Campbell-Turner, shared with us how the application of blockchain in the real estate industry has the ability to improve the way we look at not only the financial but also the non-financial transactions in the interior design and real estate space.
Campbell-Turner says that she constantly thinks toherself, “How do I impact and provide value to the end user of the space? When we embark on construction, how do I improve productivity or create a better space? What’s the benefit of the owner or end user of the space? Blockchain provides the data set to make decisions and manage processes, allowing the end user to experience a more seamless environment.”
Blockchain and Property Management
Campbell-Turner saysthat “contrary to popular misunderstandings of the technology, blockchain does not need to be associated with a cryptocurrency. Blockchain itself is not a digital token. What I’m most excited about in blockchain is the capability called smart contracts, which allows you to tie a condition to the transaction.” In simpler words, the technology that manages the back-end transactions of an exchange can also even be used to operate an existing contract, for purposes like building maintenance.
For an example, she adds, “if we have a light fixture that is built into a space, you have a sensor that can identify if the light is energized and is working. If the light goes out, the blockchain platform can notify the system manager to change the light or repair the light, and then has a written plan on what activities are needed—things like who pays for the maintenance, which maintenance company, or even indicating which internal staff member is responsible, etc. The Internet of Things [IoT] sensor can sense once it has been resolved. It then automatically pays the service provider.”
Blockchain and Project Management
Talking about project management, Campbell-Turnerexplains that blockchain’s immanent potential to process unaltered records also supports accuracy in tracking of time. “You could say, ‘I want to know how much progress has taken place and how long the labourerhas been on-site,’” she told us. “Blockchain allows you to track how much time the worker spent on the job site based on how long their IoT device [i.e., smartphone] has been on the site. What’s more, you can have an automated payment tied to the action but only released after the system verifies that the work has been completed.”
Campbell-Turner explained to us that the benefits of automating the time sheet process are extraordinary. Time spent tracking hours are ruled out, accountability problems are decreased and the processing of payment is automated. Adding to that, the time spent on back-end administrative tasks is less and it allows more time (and money) to be dedicated to the customers.
Blockchain and Design
One of the blockchain’s most important benefits, along with the transactions in the physical building, is its potential to secure the information regarding the property transaction. Campbell-Turner said: “Blockchain is like a distributive ledger. There is a copy of the ledger on all the computers that process the information. You can always see what has taken place, when it has taken place, and by whom, which can make fraudulent activities very difficult.”
Regarding the design industry, this is a great news for designers who are worried about protecting their intellectual data. It provides a guarantee and ensures that the details that the designers provide to the Building Information Model (BIM)is secured and safe, which is especially helpful while working in an open marketspace with multiple parties. Furthermore, while setting up these permissions, blockchain verifies control over who has access to the information at a given time. This promises accurate version control when working with interior design projects.
Cushman and Wakefield, regarding the future of the blockchain technology, said: “The CRE industry will need to respond to the adoption of blockchain and cryptocurrencies by major industry groups and clients. As institutional occupiers, owners, and investors implement blockchain technology in their operations and processes, the CRE industry will need to be ready to align with the technology seamlessly.”