Over the course of 2017, I’ve been doing a lot of research and learning around the Blockchain, Bitcoin, Ethereum and offshoot projects. There are some fascinating things going on in this world if you haven’t been paying attention to it. This post assumes that you have a basic understanding of what the blockchain is. If you don’t, go research and come back (I recommend starting with the Wikipedia page for Blockchain).
This is not a post advocating people to go out and buy Bitcoin or Ether. Personally, I do own some of both but only enough to cause me to pay attention to what each project is doing. The decision for individuals or groups to invest in the actual tokens is something that is best left to each individual’s taste for risk in their investments.
For those that care to think out to the future, Duke Long has been running a great series over the past few years about the potential impact of the blockchain on CRE. Last week I left a long comment on one of his posts and Sunday he replied back with a full blog addressing my thought. It was more than I expected but very worthwhile to read.
I often disagree with Duke on his outlook for the industry’s macro trends. Our backgrounds are different, the markets we’ve worked in are different, the trends we think will affect CRE are often different. Yet I still read all of his posts to understand that perspective because he’s right a lot.
One thing I don’t disagree with him on is the potential impact that the blockchain will have on CRE. I think there are some major hurdles to its adoption that are going to be difficult to get over but someone will solve those hurdles. Why?
Why you ask? The blockchain solves the single biggest issue that causes CRE’s inefficiencies: lack of trust.
The entire purpose of the blockchain model is to allow data to be shared, recorded and altered in a way that allows complete strangers to have confidence that their transaction will be correctly recorded and stored. Data integrity around contracts, records, data points, etc is assured by the distributed maintenance of the blockchain nodes. There’s a clear and researchable record of who did what, when. This is true while also still allowing degrees of anonymity.
So much of our industry is kept behind curtains because people don’t trust others. Landlords don’t trust other landlords. Tenants don’t trust their landlords. Brokers don’t trust brokers. Brokers don’t trust CoStar. Consultants don’t trust their data. Market rates are unknowable other than as opinion. The blockchain has the ability to level the playing field by giving every participant an equal starting point.