Reduction of Carbon Emissions through Transparent, Trustable and Liquid Real Estate Markets.
Climate change is happening right now and must be seen as an existential threat for humanity. We need to reach net-zero emissions by 2050 in order to be able to prevent the worst damage to our planet.
This pressing topic can be solved by cutting edge technology that facilitates collective action to fight climate change. One of these highly effective and potentially game-changing technologies is called blockchain. A system without central authority that is used as a trustable data storage.
Amongst other things, blockchain enables every stakeholder in the real estate industry – no matter if company, government or individual – to contribute to tracking and calculating carbon emissions. Therefore, blockchain helps us evaluate the carbon footprint of any type of building project. And therefore, showcase the impact of our actions.
How Blockchain Technology is Changing Real Estate
If we look back on 2019, we have already seen how one single infected person can change the entire world in a few weeks’ time. In regards to blockchain, it took only one single transaction in 2009, when bitcoin first appeared.
Interestingly, there is no requirement to understand the technical details of blockchain and how it works in order to use it. The same could be said for the majority of people who do not understand exactly how the internet functions. What blockchain has become today can be compared to what the internet was like in the early 1990s. We are on the edge of comprehending the endless possibilities of how blockchain can function within our lives. Therfore, fully expanding our imagination of what the future, specifically of real estate, may look like.
Building materials stored in a blockchain based-solution; voting systems run by decentralized networks; paperless real estate transactions conducted in seconds; smart contracts run on the blockchain without the need of a third party. These are some of the possibilities that will open a window of change regarding the time and energy that can be used to take decisive action towards climate change.
How Are Real Estate and the Need for Climate Action Connected?
Real estate is the largest investment asset class worldwide, responsible for 40% of all greenhouse gas emissions. At the same time consuming 50% of global raw materials.
As mentioned, blockchain can enable better execution of building projects through the recording of building materials. Besides that, facilitate decision making between all stakeholders of a specific project, and save costs and time during the transaction process. These innovative uses of blockchain benefit the individual as well as the collective impact on our climate.
Thus, the real estate industry has a huge role to play in the reduction of, among other issues, carbon emissions.
What is Needed to Drive Change in the Real Estate Industry?
Blockchain is called a disruptive technology for a reason. It disrupts the way we’ve been conducting business. And simultanously shows an alternative possibility, especially regarding how real estate is becoming a digital asset.
A new generation will be key in driving change in the real estate industry. Naturally, tech savvy Gen Z and Millennials are going to prefer easily accessible peer-to-peer interactions over costly time consuming transactions that involve third-party financial institutions. Why not improve liquidity by trading real estate digitally in seconds, and at the same time lowering costs?
Furthermore, the changes brought by Covid-19 are a catalyst for the radical move towards digitalization of real estate. In other words: Corona forced us to be resilient, overcoming obstacles by adapting to digital solutions.
What Are the Challenges when Adapting Blockchain-based Solutions in the Real Estate Industry?
Blockchain can help not only a large group of people to reach consensus but can also allow individuals to agree on any kind of contract or transaction peer-to-peer. There are hurdles, however. Anonymity and automation can cause challenging situations. Therefore, a global legal and regulatory framework for blockchain use in real estate and behavioural changes in our economy and society are required.
The tracking of people through applications and by digital surveillance is most likely creating the rapid increase in the use of digital identities. The uses of digital identities can have many applications, both positive and negative, for financial institutions. In preventing fraud, for example, a customer’s identity can be confirmed by verifying the digital identity of that customer. Enforcing KYC (know your customer) and AML (anti-money laundering) regulations during business transactions is beneficial for both parties. This development is further facilitating the process of digitizing the real estate industry. There is a high risk of misuse and therefore this topic needs to be handled with the greatest of care.
Many companies currently offer their online services for free or at a reduced price. This unlocks the gates to an advancement of the digital economy. A major leap towards technology has already taken place.
Furthermore, a trending collaborative attitude will strengthen the advances of the shared economy (made popular by Airbnb and Uber) and peer-to-peer transactions. Blockchain will enable the public and private sectors to collaborate under one umbrella.
How Can Blockchain in the Real Estate Industry Drive Future Environmental Change?
Real time transactions without middlemen and major innovations are transforming our day-to-day lives. Evolving technologies such as artificial intelligence, machine learning, virtual reality, IoT, cloud computing and automated robotics are the new normal.
Mass adoption of these disruptive technologies will not happen overnight. A decade ago, on April 3, 2010, the first iPad was released. How will all these new technologies and movements influence us by 2030 ?
In terms of the changing climate, global warming will cause more severe storms, floods and forest fires that will force us to take climate action. If we look to real estate, there is evidence that the integration of blockchain will save time and money in this industry. We can use these saved resources for facing major challenges during the climate crisis.
Author: Stefanie Behrendt(linked-in), board member at Fibree, founder at wegozero.co .
