Cushman & Wakefield recently published a report on blockchain, bitcoin, and their effects on real estate. In the report, the corporate real estate mogul shared that “global spending on blockchain technology totaled $945 million in 2017. This amount is forecast to increase to $9.7 billion by 2021.” Yet the adoption into the corporate real estate world has been slower to catch on, with the first real estate transaction fully funded by cryptocurrency occurring in December 2017.Many in the industry may be wondering how this relates to interiors. But before we dive into the application of blockchain in design, let’s start with the basics. Blockchain is a digital ledger in which transactions are recorded chronologically. The history of the information is linked together with cryptography and shared with each party on a database network. Bitcoin (which is supported by blockchain technology) is a type of cryptocurrency and the first decentralized digital currency. Its conception is peer-to-peer, and transactions take place between users directly, without an intermediary. While typical transactions have a single point of failure (i.e., clearing through a bank, which can take days), cryptocurrency transactions are verified in the digital realm by multiple distributed servers in minutes. These servers review the data in blocks, comparing the data for discrepancies. The “block” is then locked and passed up the chain (hence the name blockchain) to prevent fraud.
Here’s why it’s great:
- When you send bitcoins to someone else, there is no required involvement from a payment processor. This means the fee for each transaction is very small—from zero to negligible.
- When making a donation or buying a digital item that doesn’t need shipping, bitcoin doesn’t require any personal information, making it quicker and easier to for virtual transactions to take place
- It reduces risks for merchants such as fraudulent payment reversals and chargebacks.
Because of this, it’s easy to see how blockchain can have very tangible, beneficial applications in the transactions of real estate. But did you know that its applications are equally as beneficial to the worlds of property management, project management, and design? Brittanie Campbell-Turner, blockchain advocate, lean thinker, and senior product manager at Mace, shares how the application of blockchain in corporate real estate has the potential to revolutionize the way we view not only the financial but also the nonfinancial transactions in real estate and design.
Campbell-Turner says that she often asks herself, “How do I impact and provide value to the end user of the space? When we embark on construction, how do I improve productivity or create a better space? What’s the benefit of the owner or end user of the space? Blockchain provides the data set to make decisions and manage processes, allowing the end user to experience a more seamless environment.”
Blockchain and Property Management
Campbell-Turner explains that “contrary to popular misunderstandings of the technology, blockchain does not need to be associated with a cryptocurrency. Blockchain itself is not a digital token. What I’m most excited about in blockchain is the capability called smart contracts, which allows you to tie a condition to the transaction.” In other words, the same technology that manages the back-end transactions of a financial exchange can be used to manage an established contract for, say, building maintenance.
For example, she says, “if we have a light fixture that is built into a space, you have a sensor that can identify if the light is energized and is working. If the light goes out, the blockchain platform can notify the system manager to change the light or repair the light, and then has a written plan on what activities are needed—things like who pays for the maintenance, which maintenance company, or even indicating which internal staff member is responsible, etc. The Internet of Things [IoT] sensor can sense once it has been resolved. It then automatically pays the service provider.”
Blockchain and Project Management
When it comes to project management, Campbell-Turner shares how blockchain’s innate ability to keep an unaltered record supports accuracy in time tracking. “You could say, ‘I want to know how much progress has taken place and how long the laborer has been on-site,’” she explained. “Blockchain allows you to track how much time the worker spent on the job site based on how long their IoT device [i.e., smartphone] has been on the site. What’s more, you can have an automated payment tied to the action but only released after the system verifies that the work has been completed.”
Campbell-Turner explains that by automating the time sheet process, the benefits are tremendous; accountability issues diminish, time spent tracking hours is eliminated, and payment processing is automated. Less time spent on back-end administrative tasks equates to more time (and money) dedicated to the end user.
MACE project managed London's 70 St Mary Axe with blockchain.
Blockchain and Design
In addition to transactions in the physical building, arguably one of blockchain’s most valuable assets is its ability to protect the transaction of proprietary information. Campbell-Turner explains: “Blockchain is like a distributive ledger. There is a copy of the ledger on all the computers that process the information. You can always see what has taken place, when it has taken place, and by whom, which can make fraudulent activities very difficult.”
On the design front, this is great news to designers looking to protect their intellectual data. It’s like a guarantee that the data designers provide the Building Information Model (BIM) is theirs— specifically beneficial when working with multiple parties in an open marketplace. What’s more, when setting up these permissions (governance systems) blockchain can verify control of who has access to a document at a time. When working with design plans, this ensures accurate version control.
As for the future of the technology, Cushman & Wakefield leaves us with this projection: “The CRE industry will need to respond to the adoption of blockchain and cryptocurrencies by major industry groups and clients. As institutional occupiers, owners, and investors implement blockchain technology in their operations and processes, the CRE industry will need to be ready to align with the technology seamlessly.”
Featured Image: Blockchain can be used by companies to project manage building maintenance. (Image courtesy of MACE).
This article originally was published in Bellow Press and was reposted here with permissions.
Amanda Schneider is President of ThinkLab, the research division of Interior Design magazine. At ThinkLab, we combine Interior Design magazine’s incredible reach within the architecture and design community with proven market research techniques to uncover relevant trends and opportunities that connect back to brand and business goals in a thought-provoking, creative, and actionable way. Join in to know what’s next at thinklab.design/join-in.