Category Sponsor & Mentor: Newmark Knight Frank
Over the past few years, following the unveiling of a new computer protocol by a pseudonymous person or group named “Satoshi Nakamoto”, there has been an explosion of interest in Distributed Ledger Technology (DLT), often referred to as Blockchain, after the name of one of its components. This technology allows information to exist as a shared, immutable—and continually reconciled—database. As described by Don and Alex Tapscott in The Blockchain Revolution, “The blockchain is an incorruptible digital ledger of economic transactions that can be programmed to record not just financial transactions, but virtually everything of value.”
What makes this new technology so important is that it enables four separate, new concepts, each of which is fundamentally disruptive in its own right. Taken together, the result is to open up an array of possibilities so vast that we are just beginning to explore its potential. REBNY is eager to explore potential uses of Distributed Ledger Technology across all facets of the real estate industry, including property databases, financial transactions, plans and project coordination, sales and leasing, and more.
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Blockchain Challenge Cash Prizes: 1st Place: $5,000; 2nd Place $2,000; 3rd Place $1,000
Challenge Category Areas to Solve:
This newly available Blockchain functionality opens up a broad range of possibilities, including new ways in which the technologies of distributed ledger, blockchain, tokens or cryptocurrencies might disrupt the real estate industry while solving address current pain point, inefficiencies, and challenges currently faced:
Facilitate the creation of industry-wide, multi-player cooperative endeavors to develop and deploy new, definitive data sets
Enable the sale of ownership shares for individual properties, enhance crowdfunding and improve investor liquidity
Automate the creation and processing of lease and purchase agreements
Reduce the costs and time required for performing background checks on prospective tenants and buyers
Building community between properties, service providers, and tenants
While the jury is out on cryptocurrencies, the underpinnings of blockchain technology, with an infallible universal ledger, will enable places without strong property rights to protect those individuals that buy and sell real estate, especially in other parts of the world. It may also disrupt our industry in areas like title insurance, mortgage recording, and other important protection of individual and corporate rights. The four key concepts enabled by Blockchain technology are can be applied:
An immutable database, updated by an unlimited number of contributors, not necessarily relying on the trust of any one party and with no single point of failure.
Real estate is all about physical structures, on geographically specific pieces of property, divided into individual units, that are occupied by individuals or entities, pursuant to legal contracts, with all of the above changing over time. Each of these component pieces of the puzzle can be represented by data (structural plans, floor layouts, tenant credit records, leases or sales contracts, etc.) and the industry already supports a plethora of separate databases in each of these areas. Some are public, some are proprietary. Some are freely available, some are extremely expensive. Some are static, some are active. Possibilities abound for putting some or all of these databases onto a/the blockchain. Advantages could include permanence, ease of access/distribution, ease of manipulation, integration with contracts, standardized entries, and more.
The ability to create, identify and manipulate specific, non-duplicable, digital objects.
One of the core concepts of the digital world that all Internet users have internalized is that a digital copy is identical to an original. If I download a movie and make a copy for you, now we both have the movie. What has made the blockchain so revolutionary is that for the first time a digital object can be unique, and retain that uniqueness through a lifetime of use and exchange, all without requiring an owner or trusted entity to mediate.
The ability to create a new digital ‘token’ that can function as a medium of exchange—a ‘cryptocurrency’.
The ability to create a unique digital object therefore equates to the ability to create a new currency for value interchange. But whereas traditional objects used for value storage cannot be easily duplicated, they are also not unique and quantity-controlled (gold and diamonds can be mined; currency can be printed). Digital cryptocurrency tokens, however, are both unique and controllable, with publicly verifiable, permanently fixed rules about their creation and destruction.
The ability to integrate digital objects, currency and transactions completely in the cloud through the use of ‘smart contracts’.
With cryptocurrency tokens providing a digital means of value exchange, we now for the first time have the ability to directly and natively integrate economics into cloud-based transactions through ‘smart contracts’. Anything that can definitively ascertain or accessed digitally can now be integrated into an automated, self-executing contract. This is true regardless of the number of parties, conditions, time elements or value involved.