Tag Archives: #tech

Guest Blog Post: Blockchain and What You Need to Know

by CREWBaltimore Member Katherine Pinkard

You probably heard of the digital currency Bitcoin because of its headline-making and extremely volatile valuation against the U.S. dollar in recent months. But what you may not know is how it works or why it’s so groundbreaking. In case you’re not yet a cryptocurrency-trading-millionaire, what makes Bitcoin possible is the revolutionary software technology upon which it is based, known as blockchain. In their book Blockchain Revolution, authors Don and Alex Tapscott summarize blockchain as “an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions, but virtually everything of value.”

The blockchain-based idea for Bitcoin was first released in 2008 via a whitepaper, “Bitcoin: A Peer-to-Peer Electronic Cash System,” by an author known as Satoshi Nakamoto. Since then, others have developed Nakamoto’s idea by creating blockchain, the electronic system that ensures the security and integrity of the electronic data that make up Bitcoin and other, similar digital currencies.

Blockchain is what’s known as a “distributed ledger technology” – essentially a big, shared database, constantly reconciled and updated so that every copy of that ledger is the same and is reconciled. These blocks of digital information are not stored in any one location, but rather on millions of computers all at once, which all agree on each block of transactions in the chain. Thus, no single, central location houses the data, and no governmental entity issues the currency, in theory making blockchain a safer way to transact anything of value and less vulnerable to both hacking, manipulation, and the myriad political factors that can influence the relative values of more traditional currencies.

Blockchain technology is consensus-based, so every computer on the blockchain network verifies that each block is valid and accurate before adding it to the chain. Once a transaction has been added, its electronic record becomes an incorruptible, unchangeable, and a public record of that transaction, which exists forever on that block of the chain. This technology also means that it’s transparent – every computer on the network maintains and can see the record of the transaction.

Why should we, as women in the commercial real estate industry, care about blockchain? Because blockchain is one of the next big technology advancements, it could have a big impact on commercial real estate, and women can play a role in that impact.

In traditional real estate deals, multiple intermediaries – brokers, government offices, title companies, escrow accounts, appraisers, etc. – create friction (and extract payments) that slow the settlement process and increase costs. Blockchain has substantial potential to speed up transactions when buying, selling, and leasing real estate. Moving transactions to the blockchain can create a more efficient and transparent peer-to-peer system that would allow title transfers to be completed quickly and safely, without the need for third-party involvement or verification. 

Does this mean doomsday is coming for many of us in commercial real estate? Almost certainly not. There will simply be more efficient systems to transact real estate business, and the various roles in a transaction will shift and adapt accordingly.

Blockchain allows for the creation and use of “smart contracts,” which execute according to a predetermined, mutually agreed-upon set of parameters and exchange of value. Transactions would be transparent and verifiable, drastically reducing fraud and non-performance. Common tasks like collecting and paying rent, returning security deposits, and managing contract terms would become more streamlined and transparent, which would be especially helpful across international borders.

While it’s currently possible to pay rent, send a security deposit, or buy a property with electronic funds transfers from your laptop via a bank transfer, or through PayPal or Venmo from your smartphone, the “smart contracts” that utilize blockchain and cryptocurrencies are more than just electronic payments. All of the transactional terms of the lease—from the initial security deposit, to maybe a few months of free rent or tenant improvement allowance payments, standard monthly rent payment, annual rent escalations, tenant billing obligations, and the lease termination or renewal and security deposit refunds—can be coded into the cryptocurrency token contract to automatically execute when each condition, be it lapse of time, receipt or payment of money, or other conditions, is met. This mechanism can help to prevent fraud on both sides of a transaction and transparently ensure the mutually agreed-upon conditions are fulfilled by both sides. Further, the parties to the transaction do not have to depend on a trusted third party (such as PayPal or a bank) to guarantee and verify the transactions and to provide any necessary proof of funds. While cryptocurrencies have their challenges due to still being very new and evolving, they offer many advantages over existing systems both from a technical standpoint and from a transparency and efficiency standpoint.

There are many more ways that blockchain will transform our industry. From transacting real estate using cryptocurrencies such as Bitcoin, which allows us to cross borders and more freely transact across the globe, to issuing token-backed real estate funds, allowing fractional ownership in newer, more transparent and efficient ways, I believe that we will continue to see more growth and rapid development using blockchain in the coming years.

So who is actually working on applying blockchain technology to commercial real estate? The technology may still be in its nascent phase, but success stories abound and the future looks bright. Currently, the state of Vermont is working with tech startup Propy to be the first state to successfully pilot a program to record land and property transactions using blockchain. Other start-ups continue to pop up around the world like Ubitquity engineering a blockchain system to securely record and track property title and ownership; Rex MLS creating a new multiple-list service; Propify rethinking how real estate is marketed; Factom ensuring and validating digital assets; RealBlocks tokenizing real estate assets; and BuildCoin changing how public-private construction and infrastructure projects can come together more efficiently and with greater transparency.

So how would a blockchain system differ from other electronic systems that have existed, such as a Torrens? Blockchain would not be dependent on a trusted third-party (a government, municipality, etc.) to verify and guarantee title to a property. A blockchain-based system is different because of its trustless, distributed, and transparent nature. A blockchain system could make a U.S.-based title system more efficient and transparent, but also change the game in the developing world where there is much greater opportunity for government-sponsored fraud and deception related to private property rights and ownership.

It’s certainly still the Wild West when it comes to blockchain and the commercial real estate world. We’re some ways off from full enterprise-level development and adoption, and we don’t know exactly what that will look like when the time comes. But it is imperative that women play a significant role in shaping this next phase of the intersection of technology and commercial real estate. Seek to actively learn about this new technology so that you can participate in its development and application. New technology means opportunities to get in on the ground floor and have an impact on early development. 

If you can dream it, VR can make it

Technology is a huge part of everyday life for each of us.  Businesses that embrace the newest forms of technology give themselves an edge over competitors and provide services to their clients that revolutionize the way business is done.  The commercial real estate market is no exception.

While the internet and social media have presented numerous opportunities for businesses to grow without ever having face-to-face contact with a client, a newer form of technology known as virtual reality has the potential to make an even bigger impact on marketing and sales within the industry. 

Virtual reality is a three-dimensional environment generated by a computer which can be viewed and interacted with by a person with special equipment, such as a headset and speakers. The computer generated environment replicates a real environment, generates realistic images and sounds and allows the user to look and move around within the artificially created world.

This technology presents a wide array of advantages within the commercial real estate industry, as it can be shared through web applications, email and mobile devices.  It reduces time required to design a project because all important team members can access the technology from their own location on their own schedule.  Plans come together quickly and changes to existing designs and plans can be viewed, analyzed, and made at a quicker pace. Clients can tour a property virtually and see and experience a space without ever leaving their office.  It can often be difficult for a client to step into an undeveloped space and envision the final layout.  However, with virtual reality, clients can instantly have an accurate depiction of the space and depth of an area, including the space’s dimensions, flow and possibilities.  This is something that doesn’t convey as well with a drawing or a video.  Virtual reality can also provide a useful tool in the decision-making process, as potential clients can show the space to others who may not otherwise be able to physically visit the property.  They say a picture is worth a thousand words, but a three-dimensional first-hand virtual tour is something no amount of words can convey as well. 

It appears this technology is growing rapidly and will be used on a widespread basis in the future despite several disadvantages. The most important of these may be cost, as companies are required to purchase software and equipment that is powerful enough to capture a three-dimensional video and is compatible with the required accessories, such as a headset and speakers.  Some companies may choose instead to work with a virtual realty production company, which could be costly. In addition, some people who use the systems have reported motion sickness or a dizzying experience after several minutes of using the technology.  Despite these factors, the industry is moving in this direction.

Numerous commercial real estate companies across the country are already taking advantage of this technology by offering virtual tours of properties under construction.  With drone technology and digital video becoming more widespread, the possibilities for sales and marketing within the commercial real estate industry of the future appear to be endless.  Business owners would be wise to embrace this technology so they are not left behind.