As we hurtle through this age of technology, it can feel that a new piece of tech arrives with each passing year to fill a void or solve a problem we didn’t know we had.
Imagine being told that one day you would be able to command a small white box to turn on your lamp (thanks, Google Home) or that with a scroll of the thumb you could jump into a stranger’s car and be driven home safely. Everything – from how we eat to where we sleep, how we travel, shop and work – has been made easier thanks to the brightest sparks in tech working to make the improbable a reality.
Over the last few years the attention of tech’s biggest brains has been focused on data and, more specifically, how to securely share and store it in a transparent manner. The technology has been called blockchain and, while it first came to prominence as the virtual currency bitcoin, it has in no way been restricted to financial transactions – blockchain enthusiasts are continually looking at various means in which it can be used to disrupt other industries.
While blockchain is currently still classed as an emerging technology, both the experts and the enthusiasts are stating that 2018 will be the ‘year of the blockchain’. But what is it and how will it affect the real estate industry?
Let’s start with what it is.
Jamie Skella, a blockchain expert recently published a much lauded explanation of the technology on his personal LinkedIn page. The article, which was liked over 18,000 times and shared over 8000, was entitled ‘A Blockchain Explanation Your Parents Could Understand’ and described a blockchain as “a distributed database, otherwise known as a distributed ledger”. Skella went on to say: “To make things really simple and relatable, let’s call that ledger a record book and think about a ‘block’ as a line item in that shared record book."
So, in short, it’s a digital record book that can be shared across a network of computers to provide a secure way to register transactions, as well as any shared agreements and contracts – perfect for the real estate industry.
So far, however, the element of blockchain that’s really exciting to its pioneers, and to a number of Australian industries, is its transparency. Because the data is public, not owned by any third party, and has a verification process, which passes through many different computers, it’s impossible for anyone with a copy of this ‘record book’ on their computer to change any data dishonestly.
“This shared record book is owned by everyone who has a copy,” says Skella. “It is what we call ‘immutable’ or, in layman’s terms, it’s irreversible. Every line entry made will exist in perpetuity, for as long as the internet exists.”
Meaning? It’s impossible to tamper with the data.
How will it affect the Real Estate Industry?
Within real estate, the notion of blockchain has been called transformative for its ability to do away with the industry’s frustrating challenges – with a blockchain system up and running, the long process of a settlement would run much faster and more smoothly. The length of time it takes to settle on a property could be days rather than months, as once everything is running on this automated system, the relevant stakeholders would be able to oversee and directly approve any digital paperwork.
While blockchain may sound like a thing of the future, it’s been ticking away in the background for years. Back in 2014, Forsyth Real Estate in Sydney looked at introducing bitcoin payments for its residential and commercial properties, as well as for rental payments for any overseas clients. It worked with a payment provider specialising in digital currency to convert the bitcoins into Australian dollars. Despite global interest in what the company was trying to achieve, however, it ended up having to shelve the idea due to tax concerns from the Australian Taxation Office and New South Wales Fair Trading.
Three years is a long time in technology, however, and things have quickly progressed with the culmination of the September 2017 announcement that six of the major banks, including Barclays, Credit Suisse and HSBC, are creating partnerships to develop their own cryptocurrencies using blockchain technology. This clearly sends the message that, like it or not, the technology is going to be very much a part of our future and all countries and industries will need to adapt.
Sweden has already announced that its exploring the use of blockchain in real estate, while Brazil, Honduras and the Republic of Georgia have already launched pilot programs. Australia isn’t one to be left behind and has been running several projects testing the viability of the technology for the real estate business.
There was success earlier this year when Australian banking giants ANZ and Westpac teamed with IBM and Scentre Group to successfully use blockchain, instead of paper, for bank guarantees on commercial property leasing.
In an interview with Business Insider Australia Nigel Dobson, ANZ general manager Wholesale Digital, said that the bank had been keen to avoid the hype surrounding blockchain and had chosen to focus more on the practical side of the tech. Andrew McDonald, general manager Corporate and Institutional Banking for Westpac, spoke in the same interview of the viability of other industries jumping on board the blockchain bandwagon. “Next steps involve encouraging all industry players to adopt this technology. Beyond that there is no reason why this couldn’t be applied across all other industries,” he said.
With global banking taking the lead and Australian start-ups like Horizon State exploring how blockchain can be used to tackle the global cost of electoral voting, there’s no doubt that blockchain is not only on its way, but here to stay. The only real question left is: is the real estate industry ready for it?
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