Chain reaction: blockchain in today’s real estate market

AI looks set to unlock the potential of blockchain in the property industry.

Excitement about blockchain’s potential to disrupt investment and real estate grew in late 2008, including discussions in The Wealth Report.

The predictions were twofold:

• Transactions would increasingly become encoded on blockchains
• This would enable fractional investment in large assets like real estate

There have been plenty of pilots from governments and start-ups, but such initiatives haven’t yet entered the mainstream. “The predictions didn’t play out, at least not yet,” says Mats Snäll, a senior adviser at Sweden’s Agency for Digital Government. “Blockchain has always been regarded as ‘unexplainable’ and, so, untrustworthy.”

The problem with physical assets

While blockchain is good at tracking digital financial assets, it’s less good with physical assets.

When trading tangible assets, an external body still needs to ensure the state of the blockchain accurately reflects the state of the world, undermining the entire endeavour.

“Blockchain will probably be transformative in the long run, in the short run it hasn’t been,” says Andrew Baum, founder of the Oxford Future of Real Estate Initiative.