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Cornell Student Articles on Topical Affairs

Blockchain and Commercial Real Estate: What Does the Future Hold?

The discussion surrounding Blockchain is being initiated in just about every industry, including commercial real estate. Blockchain has the opportunity to entirely shift the way transactions function around the world and within every industry. It comes as no surprise that commercial realtors are looking to capitalize on the clear benefits of blockchain technology. Assets surrounding blockchain, such as tokenization, are raising thoughts in the minds of industry players.  

Blockchain, Crypto and Bitcoin

There is a degree of confusion surrounding these topics for beginners, considering they were all coined around the same time. Blockchain is a technology system that records transaction data. Many industries have experienced the merit of this technology because it is synonymous with trading without a clearinghouse.

Blockchain technology also allows for the recording, execution and auditing of contracts on distributed ledgers. Blockchain not only pertains to sales and payments, but contracts and loans as well, which is why it is seemingly made for the commercial real estate industry.

Cryptocurrencies are the currencies traded on the blockchain platform. Bitcoin is the most popular cryptocurrency, which is why it is predominantly discussed when looking at the blockchain industry. Bitcoin isn’t the only currency—there are more than 1,000 cryptocurrencies being traded by blockchain users.

Assets of Blockchain Technology Standing Out in the Commercial Real Estate Space

Blockchain brings concepts to the table that weren’t previously attainable, such as tokenization. Tokenization is an idea that allows a hard asset to be tokenized. Tokenization is like having a liquid way for two people to own a part of something. A car, for instance, can’t be bought by two different drivers. Tokenization would allow for one driver to own 50% and another to own 50% of the car. If this ownership of a car is on a tokenized level, then that percentage of the car can be sold more fluidly.

When looking at the future of commercial real estate, it may become possible for owners of a property to tokenize 20% of their property. The future of tokenization has a great potential to appeal to traditional commercial real estate investors looking to liquidize their properties efficiently.

Blockchain and estate also might make future purchases a lot easier, even for traditional home buyers. In the future, you might be pulling up a shopping cart online to invest in or purchase a commercial real estate property, which is something to look forward to.

One potential benefit that comes with tokenization is the crowdfunding in real estate being taken even further. With the development of blockchain, other countries will be able to break into United States commercial real estate with this technology. This means more room for expansion, investment and a bigger commercial real estate industry.

Security and Blockchain

Blockchain’s entrance into the commercial real estate industry will warrant space for the development of security. There is this precedent that technology is secure, but that is not always the case—especially with rapid developments in blockchain.

Crypto and commercial real estate joining forces also creates room for areas of concern, such as money laundering. As things progress, there will be a larger market for technology and security software. This can be said with any technological advancement. The trend has ultimately proven that technology security engineers can keep up with technology and make things safer than ever with encryption and cloud devices. There should be no concern there, especially when looking a couple of years into the future. You can even look at crypto and commercial real estate as extremely expensive online shopping.

There is no doubt the security industry will find a way to keep up with this trend. Security experts will tackle the issues as they come. They know that space for expertise in this growing industry is warranted.

Future Implementation

There is no question whether the commercial real estate industry will adapt to blockchain technology. The question is: How soon?

There are people in both industries thinking that these industries joining forces is never going to happen, but why wouldn’t they when there is a clear benefit for both? These changes are predicted to happen over time, not all at once. They still are predicted to happen.

The bottom line is that commercial real estate experts should be on the lookout for blockchain being integrated into their industry. Commercial real estate experts who aren’t ready for this change will be the most impacted. If you want the blockchain disruption in commercial real estate to be positive, so why not prepare accordingly?

It won’t affect everybody, but keep in mind that there are people experimenting and moving forward. Commercial real estate could be the saving grace of cryptocurrencies, which have been highly controversial in the past few years despite the potential benefit to industries and society as a whole.

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