What is blockchain?
A blockchain is a type of distributed ledger or decentralized database that supports and provides a constantly expanding inventory of records, termed blocks, which are fortified against alteration and adjustment. Each block possesses a timestamp and a link to a previously created block. As it operates, a blockchain effectively serves as a public ledger for all transactions. Every user is able to link up to the network, post new transactions and authenticate transactions.
WHEN ADOPTED BY THE CRE INDUSTRY, BLOCKCHAIN TECHNOLOGY WILL MAKE LEASING, BUYING AND SELLING OF PROPERTY MUCH MORE INFORMED, FLUID AND EFFICIENT.
Picture a spreadsheet that is duplicated thousands of times across a network of computers. Then imagine that this network is designed to regularly update this spreadsheet and you have a basic understanding of the blockchain. Information held on a blockchain exists as a shared – and continually reconciled – database.
A dollar bill provides a good analogy for how blockchain technology works. If handed a dollar bill, you have no idea where that dollar bill has been or what it has purchased in the past. Blockchain can provide a history of where that dollar bill has been, what transactions it has been used in, and where and what it’s been traded for to better identify its worth and value.
The Future of the CRE Industry
If adopted by commercial real estate, the blockchain could provide information regarding all buyers, sellers, title work, reporting, lease comps and vendor work on any individual commercial property. This information could cut out paperwork, enhance transparency and shorten the speed to transact from days/weeks to minutes or seconds. With the digitisation of smart real estate contracts, which have been designed to replace leases, blockchain could:
- Enable a commercial property to have a digital signature containing details, such as building, performance and legal information. This information could be accessed online by authorised parties in seconds.
- Allow for commercial real estate deals to transact in seconds rather than days, weeks or months.
- Better facilitate the commercial property sales and/or leasing payment process, once a deal has been concluded.
Not only will real estate transactions begin to resemble the buying and selling of stocks/commodities with blockchain, but properties in bustling areas could change hands many times a year, many times a month, or even many times a week, depending on the strategy. In addition, as publicly-accessible ledgers, blockchains can make all kinds of record-keeping more efficient.
To find out more on how to execute a smart commercial office leasing contract using blockchain, as well as implementation read the full article here.