Blockchain is most basically defined as “a distributed, decentralized, public ledger,” and is easiest to think of as a series of unique data points – or blocks – that are forever built upon, forming an unbreakable chain. Do you remember the handwritten cards in the back of a library book? In essence, that is the blockchain concept.
Add in technology, and today, Mrs. Jones checks out a book, she returns it two weeks later, and Mr. Davis then checks out that same book. This process can happen over and over again with little human intervention thanks to two important design elements that ensure trust between participants. First, Mrs. Jones and Mr. Davis establish their identity when they join the library, granting them permission to check out books. Second, each book checkout is verified by a scan of the book’s unique inventory tag and recorded, and the chain is lengthened with each future reader.
Years ago, as the principal of a commercial brokerage firm, I was faced with the difficulty of tracking my office’s transactions from listing to settlement.
While I did have internal applications and databases that were quite advanced, they still did not communicate well with each other. Sharing something as simple as a listing between two internal applications was not possible and repeatedly, I found myself downloading information as a pdf and sending it via email. My internal applications also did not communicate well with external portal providers; and when a property’s price or status was updated internally, it would often not immediately or accurately update externally.
I was not alone in my operational pain points. There are over 80,000 commercial and residential brokerages in the U.S.; and like mine, their internal systems have no way to communicate directly with each other. As I saw, this resulted in turning to regional outlets and third-party syndicators that offered a national reach. However, by listing on these national outlets, I exchanged data control for exposure, and faced the imposition of high subscription fees.
Compounding matters, portal providers did not communicate well with the transaction applications and CRM’s and it was difficult to have reliable records that linked the listing to transaction documents, participants, and financial statements.
The core technical issue was that instead of these applications pulling data from one, single source of truth, information was compiled from disparate resources; and with established roles and market positions, application providers had no incentive to standardize their data exchange processes. We operate within a $217 trillion global asset class, ranking among the world’s largest. Despite this, daily tasks and transactions are riddled with inefficiencies and insecurities from the lack of interoperability between listing portals all the way through settlement. With so many stakeholders and an overflow of information that requires the highest degree of accuracy and security, the need for data standardization has never been more paramount.
Blockchain is the solution that the real estate industry has been missing. By its very definition, blockchain is a public utility that presents an unbiased forum for data exchange, verification, record keeping, contract management, and even dispute mediation.
It is the first technology that allows users to share with one another by creating a foundation of trust between both systems and stakeholders, with the benefit of opportunity equally shared among all.
With the virtues of the medium in mind, I retreated to the technical trenches and created imbrex, the first and only decentralized real estate marketplace that leverages the Ethereum blockchain to provide full control and transparency to transaction participants. Imbrex’s open source environment is freely accessible to all and data is never stored on third party servers thus ensuring control, transparency, and connectivity for the agents and industry.
Bringing this back to our library book, an agent has a new listing on Main St. They enter the property information and a key is generated. Similar to the key to the front door, it provides access and unlocks related data. The data is universal and the key can be shared with other agents, brokerage firms, third party providers, or any application in the world; and only the holder of the key determines who has access. Security comes in knowing that at any moment, the key can be revoked, and the door will be locked. These same data exchange concepts can also be applied to the transaction, giving the buy and sell sides both full control and transparency into their transactions.
Blockchain is the future of real estate. It empowers stakeholders by providing a foundation to process, exchange and control the downstream flow of their data. Further, it has the proven ability to streamline processes from listing to closing and provide a universal layer of connectivity, security, and control.
Technology can admittedly be overwhelming, and it is often easiest to revert to the comfort of the handwritten card in the back of a library book; but by opening our minds and channels of communication – the opportunities are endless.
Stephen King is the founder and president of imbrex, New York, N.Y.