Back in 2006, there were under 150 million websites in the world. Now there are almost two billion. That year seemed to be an inflection point where, minus a small dip for a global recession, the growth curve took the turn to the handle portion of the hockey stick.
So, what happened in 2006? Did websites suddenly become easier to build? No Squarespace and WordPress were both already a few years old and quite popular. Did website designers become more economic? No, even today a website seems to costs a small fortune to design and administer. No, in May of 2006 one of the biggest things that has ever happened to the internet got its public depute, Amazon’s Simple Storage Web Service.
Before this, any company that was expecting a large amount of traffic would have to budget for, research and oversee the installation of large data servers and all of the infrastructure and personnel that came with it. This made building out websites a huge financial burden and headfirst dive into the unknown for many-a-marketing-manager. So, when Amazon stepped in and took over the hassle and upfront costs of web hosting, companies and people (I realize that these are often one and the same) were able to jump in en-masse.
Even with all of the hype around blockchain, we are in the very early stages of adoption in real estate. While there have been some interesting projects, it seems like most property shops are sitting on the sideline a bit waiting to see traction before they jump onto the chain. I don’t blame them. Programming for the blockchain difficult, there are only so many people who really understand it. It can also be unforgiving. If code is botched it can pose a security risk or even lose important blocks of info. Good developers charge a lot and the bad ones can cost even more in the long run.
But what if these were no longer concerns for a real estate company considering tokenization? What if they knew that they could rely on a large (huge!), reputable (at least somewhat) company to do the heavy coding for them? There might be a lot more companies willing to tokenize, well, anything, including properties. That is what Amazon is hoping with its new Amazon Managed Blockchain. They are offering a fully managed and scalable blockchain solution. While we were not able to obtain pricing, it is likely to be a fraction of the cost of doing it in-house. Plus, they allow the use of either Etherium or Hyperledger for those who have an opinion on such issues (or more likely have developers with opinions).
So, will this chain-as-a-service platform catch on in real estate? Will it help the tokenization looky-loos take the plunge into the distributed ledger? There are still plenty of other things that might keep real estate from large scale adoption of blockchain. First, a dominant, user-friendly exchange must emerge. Right now the idea of democratizing the asset is a bit stuck since there would be no way for the “every(wo)man” investor to find or buy a tokenized property even if they wanted to. Also, there will have to be clearer guidance (perhaps from a clearer administration) on what regulatory compliance will be needed for tokenized properties in the portfolios in which they get bundled. But, one thing is for sure. Now that Amazon has jumped in as the easy solution for blockchain hosting, we are seeing the barrier to entry for tokenizing an asset disappear just like they did for hosting a website back in 2006.