It seems everyone is talking Bitcoin and blockchain these days. The financial press, announcements from the stock market, and Silicon Valley entrepreneurs all see blockchain as a massive business disruptor, and Bitcoin as a potential new global currency.
Once Bitcoin was most associated with the Silk Road and illegal ‘darknet’ market, but now the excitement is about the blockchain technology that Bitcoin uses, which enables people to transact without any need to know or trust each other. It also allows for money to be ‘programmed’ through ‘smart contracts’, and for accounts to be reconciled almost instantly.
It should be no surprise that the real estate industry is already seeing emerging applications that use blockchain – applications that can manage payments or transfer assets between people who don’t know each other, without needing a bank or other trusted authority in the middle.
One interesting example is Midasium: ‘the blockchain of real estate’. A recent finalist in the Citibank Mobile Challenge, Midasium is building its Smart Tenancy product to allow automatic payments to landlords, contractors, councils and property managers, using rent or bonds as a source, and with smart contracts allowing transparent disbursement of funds and automatic reconciliation to a bank.
The smart contracts are digital versions of traditional tenancy contracts, and even control escrow for bond payments to reduce or eliminate bond fraud. They monitor when payments should occur and can take actions if no payments arrive or if payments are incorrect.
This might all sound a little far-fetched compared with the software that most property managers are used to, but it is the same technology that the ASX is investigating for settling share sales, and that Commonwealth Bank, J.P. Morgan and other global banks are prototyping for foreign exchange and other financial settlements.
We at CoreLogic RP Data have an active blockchain research team looking at the financial, risk-management and property impacts that blockchain technology will have on the business of our customers and partners. Like with any technology, there are opportunities and threats, but we think blockchain can be a huge positive for technology-savvy business owners, as it makes back-end processes so much more efficient.