Blockchain and its most conspicuous cousin, Bitcoin, have dominated the news cycles over the last two years, but have not yet been used by traditional industries. However, a new report by Cushman & Wakefield predicts that there will be a widespread adoption of blockchain technology by commercial real estate over the next decade. This would change the market as we know it.
Despite some misconceptions of the public, blockchain and bitcoin are not interchangeable. While bitcoin is a type of cryptocurrency, blockchain is the underlying technology that has many applications that support cryptocurrencies. In its simplicity, blockchain provides a decentralized database of transactions that are verified by multiple database users. This aims to increase the security, efficiency and transparency of these transactions.
For retail, in particular, blockchain could have a big impact.
"Retailers are exploring the use of blockchain to improve supply chain efficiency, thereby reducing delays, costs and human errors," said Revathi Greenwood, head of US research at Cushman & Wakefield. "Recently, IBM has partnered with leading US food retailers and manufacturers to increase transparency and traceability in the food supply chain, for example, if you recall food, you can track down a product in minutes. "
Blockchain could also have a greater impact than supply chain management; it could provide simplified multi-tenant management for shopping centers and multi-brand sales concepts, thanks to automatic billing and leasing administration. It could also allow for greater global reach, increasing transparency and access for buyers and sellers worldwide.
So, why did real estate capitalize on this yet? Cushman & Wakefield has identified three preconditions for the take-off of a technology: "acceptance, convergence with other technologies and scalability". At the moment, blockchain is still an experimental technology and not yet an integral part of the mainstream. With the value of the bitcoin still proving volatile, the technology also involves the risk of the unknown.
"The cryptocurrencies are a bit beyond the hype cycle in terms of adoption and already accepted as payment by several retailers, but there are caveats," said Greenwood. "Overstock.com was one of the first online retailers to accept cryptocurrency payments, but only 0.2% of its 2017 revenue came from purchases using cryptocurrencies, many of which were converted into dollars."
But experts are still confident that widespread adoption is on the horizon. The report states that over $ 1 billion in risk capital has been invested in blockchain in 2017, with an investment in the fourth quarter almost four times that of the total Q4 of 2016. IBM and Microsoft technology giants are developing blockchain platforms, while companies like Zilliqa they face the problem of transaction speed.