Off the starting block

The world of digital currency is moving at breakneck speed. Stephen Penn takes a look at how the rise in Cryptocurrencies and Blockchain is reshaping the property industry – from start-up development to sale

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 change with many industry professionals hailing it as the ‘reinvention medium of real estate’. So, how precisely is this transformation coming about?

“In less than ten years, people from all walks of life – not just the tech-savvy - have sat up and taken note of how cryptocurrencies can be used in a whole manner of innovative ways,” says cryptocurrency broker, Alex Kirkby. “Participants in the market have however changed dramatically over time. Once dominated by a highly technical audience, the medium has since found a home with a much wider global audience and is currently in the hands of more sophisticated investors accustomed to traditional financial markets, with institutional demand also picking up significantly across the world.”

It’s a shift in behaviour, that’s having a significant impact on the property industry, specifically through the use of Blockchain – an open public ledger established shortly after the banking crisis. “Put simply, it’s a more transparent way of working that’s transforming the way that properties are developed and sold,” adds Kirkby.

One entrepreneur embracing the change is Gary Woodhead, founder of CurveBlock. With a long and successful career in real estate and construction, he is spearheading a new movement that puts cryptocurrency investors in the driving seat of residential and commercial opportunities.

“You could effectively call Blockchain crowdfunding 2.0, as it’s the ledger technology next step forward,” he explains. “It offers transparency as it cannot be altered or changed. At Curveblock we’re subsequently cutting out the middleman when it comes to getting property developments off the ground.”

Curveblock allows investors to put their stake in real estate undergoing development – dictating which projects make it onto the open market – all the while securing a share of the profits when the developments are sold.

“People who physically hold Curveblock tokens can use a protocol that allows them to stake against developments and take a share of the profits,” he explains. “It’s a system that’s turning the real estate industry on its head.”

But this is just the start of potential spin-off opportunities for property markets. 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 in 2016 which caused a huge stir and bolstered the views of many doubters. Snagging trials are moving quickly to rectify 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 Kirkby: “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.”

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 four bedroom after completing the full exchange of contracts online
• The global Blockchain market is expected to be worth $20 billion by 2024