Big data analytics. Artificial Intelligence (AI). Blockchain. All of these technology advances are transforming industries across the globe. While these technologies were once viewed through a futuristic lens, the reality is that advances like blockchain technology are already making a significant impact on the commercial real estate industry.
As we communicated in an earlier blog, blockchain technology – the framework for cryptocurrencies such as Bitcoin – is having a significant impact throughout the business world. As a ledger tool that enables the secure and permanent recording and distribution of data across multiple users, blockchain is beginning to revolutionize commercial real estate by its potential to expedite deals through rapid transactions. Because anyone using the system can verify every transaction, blockchain provides enhanced transparency while protecting user privacy.
Blockchain Smart Contracts
Blockchain-based smart contracts are made through a self-executing code on a blockchain that automatically implements terms of an agreement among multiple parties. In other words, smart contracts are not traditional contracts; rather, they are pieces of software that go beyond recordkeeping by implementing terms of multiparty agreements based on consensus protocols. Prior to blockchain technology, this wasn’t possible because each party maintained a separate database.
For those in the commercial real estate industry, smart contracts mean that every step of a sale or lease deal is automated, from validating loan eligibility to making payments 24/7. In other words, contracts can be initiated, authenticated and audited in real time anywhere in the world without the need of a middleman. With a smart contract, a payment can only be made upon completion of all of the deal requirements, with complete transparency to each party involved.
Does Blockchain Make Sense for Your Company?
Today, blockchain smart contracts are beginning to be adopted by real estate executives for purchasing, sales, leasing, and financing. To determine whether blockchain makes sense for your company, consider the importance of transparency, the need for more streamlined transactions and reduced risk.
For example, does your real estate company frequently make transactions with the same network of parties? If you have lenders, investors, tenants, and owners as part of the equation, you could benefit from a shared database that can be securely modified by each party.
Rather than having each party conduct separate manual tasks, the blockchain can reduce redundancies by performing as a single, secure source with smart contracts to make transactions flow seamlessly.
Finally, if you are considering an upgrade to your current systems, consider whether blockchain might increase efficiencies among your company and other industry professionals with whom you frequently interact.
Note: This content is accurate as of the date published above and is subject to change. Please seek professional advice before acting on any matter contained in this article.