Article taken and translated from here.
Blockchain technology can push the real estate industry far into the digital age. And the industry needs a push, says the network Proptech Denmark.
ØRESTAD – Imagine the real estate industry without brokers and where everything goes digital with the help of digital currencies and real estate deals where only the parties involved have access to data.
This may sound like something that is far off in the future, but in fact, it is not that distant when listening to some of the players currently trying to incorporate the technology into the Danish real estate industry.
Several of them are already experimenting with blockchain technology and how to leverage it in various areas of the industry.
Blockchain
A technology built by cryptographs (block) that are linked together (chain). It makes it possible to gather large amounts of information that are endlessly copied and make them impossible to falsify. Only those who have access to the blockchain through their own computer are authorized to modify the chain of information. This means that real estate deals can be rendered more secure, as only the parties involved can access the prospectus or the owner’s register. Blockchain technology can be termed as an extra “layer” on the Internet as we know it today.
New Thinking Is a Must
The real estate organization Proptech Denmark, whose mission is to push for technological development in the real estate industry, believes, among others, that Denmark lags on technological development.
That’s why last week it brought together several companies and presenters who talked about how blockchain technology can help change the real estate industry and how development and trials are already underway – both in Denmark and abroad.
“The Danish real estate industry needs to step up if we are to join the international scene. And that’s why we also have to think new,” said Proptech Denmark director Nadim Stub.
Blockchain offers, among other things, opportunities in the sale of real estate. And it could mean that the many “middlemen” involved in trades, such as real estate agents or banks will no longer be needed.
The blockchain technology is based on trust between the parties involved and does not require an institution as an intermediary, because the blockchain acts as an intermediary instead.
Specifically, this means that the seller and buyer can transpose the entire deal into the blockchain: the owner’s register, the prospectus and even the e-dna for both sellers and buyers. This allows the entire transaction to take place online, and it can make it easier, faster, and cheaper, as it does not require paying fees to intermediaries or waiting for due diligence processes.
The Technology in Its Early Days
Pilot projects with such trades are already underway. For example, the Swiss Exchange has given it a go, and in spring launched an ecosystem that can handle digital assets.
In Denmark, the digital companies DigiShares and HD Lab are also trying to implement the blockchain technology, and soon DigiShares will start a trade for approx. 22 million DKK in New York.
However, Juliane Sloane, an analyst from the US company Leaseum Partners, pointed out during the conference that if one wishes to trade through blockchain technology, the technology is not enough. High-quality assets are also required.
Several of the presenters, including Niels Falk, CEO of HD Lab, who has also been working in the field, mentioned that, currently, this innovation is still in its early days, as the Internet was in the late ’90s when a modem was needed.
Legal Challenges
But the future of blockchain in the Danish real estate industry is not without challenges. Claes Holm-Nielsen, commercial real estate legal advisor at Accura, points out that there are legal issues that have yet to be resolved.
His colleague, Peter Brask Tind, a lawyer in IT and personal data, explained during his presentation that the biggest challenge is how to decide what laws blockchain deals should be based on. Especially when it comes to international trades, where there are several types of investors, or when there are conflicts between traders.
“When you choose to use the blockchain, some laws that you trust must work so that there is full transparency when deciding which rules to apply in solving conflicts”, said Peter Brask Tind.
Besides that, there are other challenges such as financial tracking, taxes, personal data and, not least, who is responsible if there are technical issues with the blockchain. Therefore, the two lawyers suggest that there should be a self-driving unit independent of the trade, which is self-owned and can, thus, ensure that the deals are conducted as intended.
DigiShares is currently conducting its own STO, learn more here.
