EMBRACING THE FUTURE WITH BLOCKCHAIN

25.09.18

Big banks have been eager to promote digital currencies as a more ef­ficient way to move secure data around without hurting underlying business. Now the world of real estate is embracing the medium. James Matthews takes a closer look at the disruptive world of Blockchain

Veteran business strategist Don Tapscott argued in a 2016 TED Talk that Blockchain had arrived to forever shape the future.

While the concept has been around since the inception of bitcoin in 2008, it has taken the best part of a decade for the technology side of things to really hit significant levels of mainstream awareness and for cryptocurrency – a digital global money system currency to infiltrate itself across different industries.

The property market is no different in embracing this futuristic move, with many industry professionals hailing it as the ‘reinvention medium of real estate’. So how precisely will this transformation come about? Put simply, Blockchain is a digital ledger where transactions are made in Bitcoin or another cryptocurrency and recorded chronologically and publicly. Blockchain is to Bitcoin what the Internet is to Google.

Explains Gary Yeoman, CEO of visual intelligence company Lookabout: “Essentially Blockchain technology compiles records of transactions into systems called blocks, which are secured cryptographically and contain a digital fingerprint of past and present records.

“Across the globe, land registries are in the early stages of using Blockchain to instantly transfer property ownership in a secure way. But its presence and application merits are increasingly being felt.”

In the UK, HM Land Registry has announced plans to create a virtual ‘digital street’ to test the new technology, calling it a ‘highly ambitious objective’ that would require the most ‘far-reaching transformation in their 150-year history’.

Those leading the charge in development are sounding the horn of the benefits in kind in the property investment arena.

“It could genuinely revolutionise the real estate market because it provides 100% liquidity 24/7,” says Abimanyu Dayal, chief executive of Estatechain, “If you want to invest in London residential property today, you are looking at £700,000-plus and are locked in for seven to nine years. Now you can enter and exit whenever you want and that is how people want to invest.”

This move has also been welcomed by many industry critics, including Mark Lloyd, the head of Property Mastery Academy. “If Blockchain technology was to be used for land-registry transactions, it could bring about significant benefits,” he says. “Amongst these would be the ability to automatically process contracts, and as a result, considerably cut costs.”

“Blockchain puts real estate on a new footing,” adds Yolande Barnes Head of World Research at Savills. “If it has the potential to increase liquidity and reduce costs, some significant barriers for investors are removed.”

The rise of Blockchain is also paving the way for breaking down barriers between real-world holdings and synthetic derivatives, making investment liquid, transparent and instantly tradeable. Increased security is understandably a high priority, as identity records are tamper-proof and entire accounts can be locked.

In 2016, Ethereum currency was hit by a $64 million hack which caused a huge stir and bolstered the views of this, however, as a recent report from the Royal Institution of Chartered Surveyors (RICS), argues that a radical improvement in the accuracy and timeliness of reporting, a reduction in the cost of managing buildings, and a change in the way property agencies work will all be seen in real time.

Adds Yeoman: “Across all industries, it’s clear that the future is paperless, but for the property world, a move towards digital currencies really could revolutionise the industry forever with the potential to increase liquidity and reduce costs for both buyers and sellers.”

NEED TO KNOW - BLOCKCHAIN AND BITCOIN

  • Bitcoin is only eight and a half years old, but today it’s the oldest and most highly valued cryptocurrency on the market
  • The first transaction involving bitcoin was reported on May 22, 2010, when a programmer identified as Laszlo Hanyecz successfully traded 10,000 bitcoins for pizza
  • According to recent data, 1,000 bitcoins are worth around £4.9 million
  • The first UK home to be sold using a Blockchain system was in Manchester. In March, HS Property Group used the click to purchase platform, in order to sell a fourbedroom after completing the full exchange of contracts online
  • The global blockchain market is expected to be worth $20 billion by 2024

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