In an industry that still uses a lot of paper, a blockchain ledger could provide commercial real estate with improved efficiency and security in how records are transmitted, recorded and stored. Advocates believe that the industry will eventually adopt blockchain technologies for essential real estate functions such as payment, escrow, and title. They say that implementation of blockchain has the potential to reduce fraud, increase privacy, speed up transactions, and open up international markets.
Simply stated, a blockchain is a distributed database or public ledger, made popular by Bitcoin, that maintains a continuously-growing list of all transactions in a particular network that have ever been executed. The “blocks” are added in chronological order with cryptography to prevent tampering, thus becoming an indelible record of every transaction in the network and accessible to every participant.
Spearheading the blockchain for real estate conversation is a California-based trade organization called the International Blockchain Real Estate Association (IBREA). In three years, the association has grown to include nearly 400 members from the fields of real estate and technology. Its founder, Ragnar Lifthrasir, has been involved with various Bitcoin real estate startups, including co-founding meson.RE, a platform that helps Mainland Chinese send and receive money for real estate transactions in Canada and the United States using Bitcoin.
According to Lifthrasir, the most exciting development in blockchain real estate is the sudden and broad recognition of the technology’s potential for property transactions. “I’ve been advocating for Bitcoin and real estate since 2013 and more has happened in the last three months than in the last three years,” said Lifthrasir. “2016 will be the year the sleepy real estate industry wakes up to Bitcoin and blockchain.”
Lifthrasir is organizing a first-ever full-day IBREA Conference scheduled for May 17th in Newport Beach, California. Top professionals from real estate and technology will participate in panel discussions, working groups, and beachfront networking. The keynote speaker will be Jeff Garzik, a well known Bitcoin core developer and co-founder of Bloq, a firm that helps companies develop and implement blockchain technology — similar to what Red Hat Inc. did with open-source software Linux.
Other conference participants include Daryan Dehghanpisheh, senior VP of digital strategy at Howard Hughes Corporation, attorney Amy Wan who specializes in crowdfunding and startups, and real estate technology investor Zach Aarons, among others. Aarons, who chairs the New York City IBREA chapter, co-founded real estate technology accelerator MetaProp NYC and is a project manager for real estate developer Millenium Partners.
Lifthrasir and real estate technology investor Zach Aarons — who chairs the New York City IBREA chapter and co-founded real estate technology accelerator MetaProp NYC — recently sat down with Propmodo to discuss blockchain for real estate and the upcoming first-ever IBREA Conference.
Propmodo: What’s the most exciting development in blockchain real estate right now?
Aarons: There are a few companies that are going into developing countries right now and creating a system for deed recording and title transfer using the blockchain where none existed before. In the USA, we have a system (albeit a rather wonky one) that has existed in some form or another since the 17th century when there were land grants in the 13 colonies from the crown of England. Some of these other countries don’t even have paper deeds so they can really “leapfrog” us using blockchain. That is very exciting to me although I don’t know how monetizable it is yet.
Propmodo: As an investor in real estate tech startups, what do you look for in a company that’s using Bitcoin and blockchain technology?
Aarons: MetaProp NYC has yet to pull the trigger on a company that is looking to use blockchain technology for real estate. The reason for that is it’s still so early. If you look at all the Bitcoin 1.0 companies like Mt Gox, etc they all went under. It was the Bitcoin 2.0 companies like Coinbase and Bitpay that did it correctly and will be around for the long haul. As an investor, I am looking at the first wave of companies with excitement but no one yet knows the clear path. So, I would say I am going to this conference more as an intellectual enthusiast than someone looking to fund a company. If I were to back a blockchain based real estate tech company, I would look to back a company that’s using blockchain not as their core offering but as an ancillary service. In my opinion, a company needs a foothold in some other aspect of real estate transaction tech and then they can layer in the blockchain functionality gradually.
Propmodo: What are the goals of the IBREA Conference and who should attend?
Lifthrasir: This conference will drive adoption of Bitcoin and related technologies in the real estate industry. The focus is on producing results. By the end of the event we want to see investments pledged to startups, new business partnerships formed, and regulatory questions answered. We expect a broad range of real estate and technology professionals to attend the conference — from real estate brokers to large incumbent software companies. I would especially encourage those who work in property title, finance, leasing, and brokerage to attend.
Propmodo: What makes this conference different than other technology related real estate events?
Lifthrasir: Our conference won’t be a passive listening activity. Pre and post conference, attendees can collaborate on our Slack Channel, join our LinkedIn Group, find experts through our consulting service, research subjects and contribute knowledge to our library, and coordinate startup activities on our AngelList page. Traditional conferences devote too much time listening to speakers. We’re structuring time blocks and small groups to maximize constructive, focused socializing.
Propmodo: What are the biggest barriers to widespread adoption of blockchain technologies for real estate transactions?
Lifthrasir: The biggest barrier at this point is finding the first two big institutional counter-parties to agree to transact on the blockchain. Once they prove the time, money, and security benefits, others will follow.
Aarons: In 2013, when I first started yelling about blockchain and real estate to anyone who will listen, no one had any idea what I was talking about and thought I was crazy. Ragnar and Jeff Howells and others out in OC were talking about it too but I didn’t know them yet. There was no one in NYC discussing it. Now, we have CIO’s and CEO’s of multi billion dollar real estate companies talking about blockchain so we are almost there within the industry. The largest barriers now are the government entities themselves, the county clerks offices, etc, who are going to be slow to adopt understandably. Another major barrier is that everyone like me is in the “wait and see” mode. There are still so many questions about which blockchain this technology will be built on: Will it be Bitcoin, Ethereum, a Private Chain, or a whole new blockchain yet to be invented.