Coldwell Banker River Valley Commercial Division

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Blockchain coming to a CRE transaction near you


Posted: November 28, 2018 by Anna Jotham

With cryptocurrency seeping into industries around the globe, it was only a matter of time before it made its way to real estate. And rest assured, it’s here.

Already, a third of millennials have invested in cryptocurrency, according to a study last year by London Block Exchange and reported in Independent. And Hacked.com notes that analysts in both technology and real estate expect blockchain will be widely adopted in the next ten years.

 

Savvy commercial real estate owners and investors need to start watching.

Love it or loathe it, you need to understand how blockchain is disrupting the CRE industry. For most of us, that begins with understanding the technology and terminology:

  • Cryptocurrency. As its name suggests, cryptocurrency is an encrypted digital currency used as a medium for exchange. It operates without any central authority, bank or another third party.
  • Bitcoin is perhaps the best-known form of cryptocurrency. You can buy it or another cryptocurrency with cash, trade it with other cryptocurrency users for goods and services, and sell it for cash.
  • Blockchain. Blockchain is the technology that supports cryptocurrency. It’s essentially a decentralized digital ledger where cryptocurrency transactions are publicly recorded under your blockchain address rather than your identity.

 

Cryptocurrency makes real estate transactions faster, easier.

The potential for cryptocurrency in the real estate industry is enormous. Forbes notes you can already purchase and complete a property sale (including escrow and title insurance) simply by clicking on a shopping cart on a website. The blockchain will record the title or deed to the appropriate public records and ensure the seller gets the cash (in cryptocurrency, of course) and the buyer gets the title or deed.

 

Blockchain is attractive to CRE owners and investors.

At this stage, blockchain in the real estate industry is most common in commercial and international transactions, appealing to CRE pros for several reasons, according to Coldwell Banker Commercial.

  •          Smarter, more transparent transactions. Because the process is automated, transactions can happen far more quickly.
  •          Liquidity. If you’re looking for a more diversified portfolio, blockchain makes it easier to liquidize assets. Because all investments are registered in the ledger, exchanging shares is simple and fast.
  •          Land titles. Until now, land titles and records have been kept offline. Again, by automating the process, blockchain can not only drastically reduce that time required for recording and transferring titles, but it also does it with the additional benefit of increased transparency.

The same features that make blockchain effective for exchanging property also make it work for information exchanges, so CRE investors can also use it for everything from storing contracts to monitoring cash flow.

 

Blockchain holds promise for CRE buyers and sellers.

There’s no telling the many ways blockchain technology will affect commercial real estate in coming years. Though not yet perfected, its widespread use seems inevitable. And that means cryptocurrency—and the speed and efficiency if offers—are coming to a commercial real estate transaction near you.

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