See if you can answer this question without Googling it: what resource increased in value by 61,190% from 2011 to 2017? If you guessed Bitcoin, you’re correct. In fact, if you invested $100 in Bitcoin as an early investor on June 28,2010, your investment would be worth $28.3 million today! When something surges in value like that, professionals in all industries — commercial real estate included — take notice.
For Bitcoin to work, however, it requires blockchains. Some theorize that these blockchains, the infrastructure that keeps cryptocurrency honest, are the future of the “financial aspect of real estate.” But is the potential too low here or is this too far off to even care? Read on to find out.
What Are Blockchains?
According to Investopedia, “a blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks,the most recent transactions are recorded and added to it in chronological order, allowing for market participants to keep track of digital currency transactions without central recordkeeping.” As it applies to commercial real estate, this means you can have one digital record for all the data related to your portfolio, from leasedocuments to projects and even your reports. You can store an immense amount of information across a digital space and you (as well as any colleagues on the network) will be able to see updates in real time.
The Impact of Blockchains on Commercial Real Estate
The best part about blockchains? Their duplicated design makes them impervious to hacking. This means CRE pros can store real estate records with zero worry of them being ripped off. RealCrowd puts it this way: “If property transactions have a trusted source on the finance side—a source that is not your traditional institution but perhaps a fintech company that automates much of the protocols—deals could be completed at blazing speeds. And with smart contracts and electronic signatures in place, the potential for fraud is practically eliminated.” Basically, blockchains have the potential to dramatically improve your efficiency and dramatically lower your risk.
Should You Worry About Blockchains Now or Later?
So, is this something you should put off, or should you become an early investor when it comes to utilizing blockchains in your CRE transactions? It depends on your unique situation, how much of a risk you are willing to take, andyou need at least some sort of a transition plan before you dive in. (i.e. don’t start making all of your CRE transactions in Bitcoin!)
One way to ensure your portfolio is in order and that you’re able to track the data points necessary for a transition like this is with CRE software like Quarem. Like blockchains, Quarem increases the efficiency and security of your records process, but with the added bonus of more organization, control and simplicity. It’s fantastic for CRE pros who are considering the potential of blockchains, but aren’t ready to dive in just yet.
Want to try out CRE software for yourself? Consider requesting a demo of Quarem today.