By Ian Cameron, CIO OSCRE International

If you haven't heard of Blockchain yet, it's likely you will soon. It could drastically change the real estate industry If it takes off as proponents believe. "It's a new technology, a way of doing business, and transformational if it plays out." - as heard during a Blockchain panel discussion I joined at Realcomm earlier this month.

OSCRE is looking into the long-term potential for Blockchain, given our stake in information flows across the industry. To get the general picture, you can think about this all the way up the ladder from the individual transaction, to portfolios, to whole new businesses and industry practices. It's a potential breakthrough in technology that could restructure the way information is exchanged and business is conducted in real estate.

So what is it? Blockchain is (1) a technology and a business practice built on peer-to- peer transactions plus (2) a packet of information (a block) with the ability to create an historical and permanent ledger of transaction details. International banks, investment firms, technology companies and others are spending significant capital and resources to evaluate the benefits and potential impact of Blockchain. Key features of Blockchain include:

Conducting transactions without an intermediary or a clearinghouse
A "distributed ledger" with a history of a transaction, property, asset, or title
A digital ID with security build around it
The ability to transfer funds in new ways, including with digital currency (think Bitcoin)
Public or private with security and encryption concerns yet to be worked out

How could it apply to real estate? Early assessments of applications in real estate include:

Lease transactions going directly from lessor to lessee
Land acquisitions and dispositions including title and parcel details
Histories available during acquisition, due diligence and portfolio exchanges Maintenance on building systems that show maintenance records

Disintermediation, fraud prevention, increased use of digital currency, and smart contracts are some of the top impacts of Blockchain. Transparency is a significant benefit along with faster transactions and lower costs. Security and fraud concerns are still to be resolved, as in Brazil recently, where "...hackers siphoned off $50 million from the Ethereum blockchain, an online ledger behind smart contracts and cryptocurrency," according to CRE-Tech Daily late last week.

Where would data exchange standards fit? Data quality is one of the major benefits of a blockchain which is of great interest to OSCRE. Data exchange standards will play a significant role in creating consistency, trust, and a common ground for Blockchain transactions. The international scope of Blockchain makes international data exchange standards even more important because of the diversity of assets and the geographies involved. OSCRE Standards are already tailor made for this kind of use and could accelerate the setup and growth of Blockchain activity.

What's next? Blockchain is still a new technology and Integration will be a major challenge where systems might need to be replaced. The real estate industry has faced new technologies before and it takes a commitment to change practices. However, many are getting ready.

Consulting companies are already setting up Blockchain practices and advising clients to do their own due diligence and to get ready for transitions
Some firms have already stepped into Blockchain around a specific focus, such as subleasing, and are already seeing results

Others are doing the research and exploring proof-of concept projects to help decide how Blockchain might benefit their organization
Emerging uses for specific types of real estate transactions, such as leases and land transfers, will be very influential.

It will take time for Blockchain to build momentum in the real estate industry. Wider use and adoption will depend on the ability to scale up to the institutional and portfolio level with international scope. We'll be talking more about Blockchain in the near future.