An abstract illuminated cityscape representing digital real estate
Property Shapers: “Meet the Architechs”.

The World Wide Web was created nearly 30 years ago and the private sector was quick to capitalise. The first secure online transaction took place in 1994, and the first internet banking service appeared that same year.

eBay and Amazon arrived the year after. Since then, digital commerce has continued to grow, introducing more choice, speed and convenience into the world of business.

From information to ownership

The technology behind the Web allows information—hosted in databases and transferred across the internet—to be effortlessly copied, linked, searched and used for many purposes. This is useful for everything from streaming video to sharing digital documents. But the Web does not capture several properties we require for conducting business, including ownership and identity. If I hold a deed of ownership, I want to prove that I am its sole holder and prevent it from being duplicated or used as the basis for a fraudulent claim.

Blockchain is a technology that stores transactions permanently. Records cannot later be erased; they can only be updated sequentially, preserving a continuous history. It builds on the Web but allows us to rethink how we record transactions, store data and evidence ownership.

There are several ways to think about blockchain. Technically, it is a back-end database that maintains a distributed ledger which can be inspected openly. Trust in the integrity of that ledger is maintained using cryptographic proofs, while a network of computers—often called honest nodes—supports the security and governance of the information. From a business perspective, blockchain is an exchange network for moving transactions, value and assets between peers, relying on the integrity of the network rather than a trusted intermediary such as a clearing house, exchange or registry.

Today, we “Google” the Web for information and products. In the future, we may perform the equivalent of “Googling” a blockchain to verify records, identities, titles, contracts and other asset-related processes. A networked economy could eventually have a digital mechanism for ownership of almost everything, with records that mirror our non-digital assets.

Why real estate is a natural fit

The real-estate industry is a rich source of potential applications because it is fragmented across processes, services and firms. Complicated supply chains frequently lack a single, open and trustworthy source of information.

Registries and conveyancing

HM Land Registry’s “Digital Street” initiative created a digital register for a small selection of properties, an early step towards a register that is fully machine-readable and can be updated instantly. Its goal was to explore how a digital register might enable new business models and make conveyancing simpler, faster and cheaper.

Construction accountability

The construction industry has become increasingly litigious as project values have risen and contractors and subcontractors have been forced to price their services more competitively. Blockchain could curb this trend by creating a “panopticon effect”: parties moderate their behaviour because they know their conduct can be properly observed later.

Buildings as persistent digital assets

The Internet of Things is also changing how assets and buildings are instrumented and serviced. Sensors and smart appliances, combined with blockchain records, could improve the feasibility and reliability of IoT applications during both construction and management. Together they could create a digital signature, or “DNA”, for a building that persists across its full lifecycle and multiple owners, occupiers and service providers.

Still early

We are at a very early stage of exploiting this technology. Many high-profile projects have been announced and have yet to materialise. But blockchain is part of the continuing evolution of internet technology, much like the Web before it, and may support the continued growth of our businesses and society.

The ideas presented here are explored in more detail in William Mougayar’s The Business Blockchain (2016), with a foreword by Vitalik Buterin. More information on applications of blockchain in real estate was published by the UCL Construction Blockchain Consortium, which supported knowledge transfer and assessed and tested commercial services and technologies.

This article originally accompanied Mishcon de Reya’s Property Shapers, an annual magazine examining the trends affecting real estate. Read the original edition.