At the end of the last decade of the 20th century, there was the innovative and visionary idea that one day all companies would have to make the decision to adopt the internet and to make their entire business digital, and many, for the sake of their sins, distrustful and ignored this design. Many, much later, realized that they were fundamentally wrong and, as history tells us, many companies, comfortable with their status quo at the time and dominance of the market in which they operated, struggled to reposition themselves and even some practically disappeared. Who doesn't remember the cases of Kodak, Nokia, Blockbuster, and so many others?

I could now try to create a parallel between the magnificent days we live in and that of the Dotcom bubble, and it will make perfect sense to do so, but there is something substantially different to see.

The world, due to its constant evolution, adopts and accepts in a much faster way innovations, disruptions and, consequently, changes are happening more and more at a greater rate. Who doesn't remember creating their first e-mail account, how access to knowledge became widespread through the daily use of the internet and which enabled millions to create their own businesses with an infinitely lower entry cost, or the evolution of mobile phones for smartphones with the launch of the iPhone that revolutionized the industry forever. I can also refer to the way in which we started to transfer data, facilitated by Bluetooth technology or how all the information that a person generates and acquires in a week today is equivalent to all the information acquired by a person who was born and lived in the 17th century. Nothing, but even nothing, has returned to the same and everything happens much faster.

With Blockchain technology it will not be different and we can also look at the next figure for the Gartner curve taking into account the adoption and maturity of Blockchain technology and realize that we live in a time very similar to the DotCom bubble.

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As I mentioned in my previous article, Blockchain technology is often confused with crypto, or with Bitcoin, but this analogy doesn't make any kind of sense. In a simple way, Bitcoin is the first and most well-known cryptocurrency, a form of payment or a store of value, but what really matters to study, debate or iterate is the technology that supports it and that allows the market to operate in a decentralized manner, without the control of a central authority, with total transparency, security and data integrity. And this is where all my personal interest and motivation lie, since I am ecstatic with the infinite applicabilities and possibilities that this technology will bring to the “real world”, and in our case, to the real estate market.

It is undeniable that Blockchain will increase trust, credibility, and integrity over any and all information and, consequently, the market. So let's see how this public and unalterable book, fed in a distributed and decentralized way, would work throughout the ecosystem that makes up the real estate market (brokers, real estate agents, financial and credit entities, lawyers, solicitors and notaries, real estate developers, citizens and public and government institutions):

1. A transaction or registration is requested;
2. This request is transmitted over a computer network, which we will now call database access;
3. Through algorithms, each node will have the capacity to process the previous order (s);
4. The request requested in point 1, which may be a contract, a simple registration or a “currency”, is verified by the entities that are part of the ecosystem and that access this public book through each of us;
5. Once the verification is complete, the public record book (better known as a decentralized database) is updated with a new block, which contains this entire new complete set of data;
6. This new block is added to the Blockchain and can never be deleted or changed (immutability is the key variable that will be the catalyst for the much desired transparency).

As we can easily conclude, this process that I just described can have several applications in the real estate market and will add a level of reliability and credibility to those who provide their services through this technology. Now let's see. The real estate market is not consistently interconnected and real estate brokerage business processes are considered by all involved to be extremely inefficient and opaque processes. This lack of transparency results in a lack of trust between different relationship audiences, as many of them have conflicting interests. The current process of buying or selling a property involves a wide range of different actors that have different functions and objectives, making it difficult to ensure that all interests are aligned. These conflicting forces make the business process very inefficient, expensive, and time-consuming.

Because there is no trust between the different parties, the process requires the authentication of several documents, the signing of a myriad of contracts that come with high legal fees, the validation of everyone's identity and the need to closely monitor the payment of the commission fee, which in cases of litigation comes with high legal costs. These requirements become even more difficult to overcome because information is stored in public and private silos (the CRMs of the mediators or SIs of the different stakeholders) that do not effectively communicate with each other. This is an almost infinite process of authenticating and validating everyone's paperwork. The process is paper-based, meaning that it's difficult to guarantee data integrity throughout the entire process or lifecycle of a real estate transaction.

This results in a set of challenges/problems that the market will have to solve in the medium/long term:

1. There is no simple and intuitive way to access credible, secure, and accessible information in real time;
2. The validation process for all documentation is opaque and inefficient and is done offline (paper-based);
3. Any real estate transaction process is too time consuming and worse, it does not respect the GDPR;
4. Very high transaction costs;
5. Market with very little liquid and with enormous barriers to investing;
6. The vast majority of proprietary information systems or software do not communicate with each other;
7. Fraud;

Long story short. Blockchain brings with it a different paradigm and, above all, a way of developing businesses based on trust, immutability, transparency and the integrity of information.

Without wanting to go into more technical details that have little interest in this article, I want to state that Blockchain is in fact a much fairer and more democratic technology whose direct consequence is the reduction of the risk of corruption, money laundering or fraud by guaranteeing immutability and transparency in relation to the information generated and shared. The world is now beginning to realize the real impact and added value that this technology can bring to society in general and to the great challenges that challenge and concern us today. It can be applied to a patient's medical records, to the identity of each citizen (in its most varied forms) creating a unique citizen record, or simply to the collection of taxes by central governments. Believe me, the applicabilities are endless when perceiving technology and its evolution.

In the real estate market, it can create the much desired trust between all those who make up it, which is so complex and competitive, and one of the most important for national economies. It can also act as the public property record book, shorten the time of any real estate transaction (digitally sign contracts, validate identities, etc.), reduce the risk of fraud, reduce the indirect costs that exist in a real estate transaction, reduce administrative fees and, in the end, bring the long-awaited liquidity in real time to everyone.

Although there are still some challenges to be solved, I can say that the progress of some startups in recent years seems to have been impressive, however, it will still take 2-3 years before it is possible to scale technological solutions based on distributed technologies, but the message for the ecosystem is clear. Blockchain technology is here to stay and will have a fundamental word in the way in which real estate processes will be shaped and redesigned and will open the door to a series of ways of generating value that have never been possible before.

It seems to me that the advice derived from the knowledge that professionals have in the field and that comes from normal empirical experience and networking in any market will continue to be crucial and none of this will change. However, the way in which property registration was designed and executed, the way in which any real estate transaction process (sale, lease, transfer or exchange) is carried out will change radically and will benefit, once again and in the first instance, those who have automated and digitized their entire business.