“Blockchain is slowly making its way into real estate, but let’s be honest, it’s still early days,” Mitch DiRaimondo, co-founder and lead project manager at CRE developer SteelWave Digital, tells GlobeSt.com. “The tech is ready, but the industry isn’t. Most of what’s happening now is limited to test cases and niche platforms. Real momentum is building under the surface, but you have to know where to look. Blockchain is fixing real pain points — friction, settlement delays, lack of liquidity — but we’re still laying the pipes.”
Tech takes a long time, and then adopting it can be just as long, if not longer. Potential users have to understand what it can do and then eventually realize that the capabilities could fit into practical needs. Historically, this has been much harder to do than it sounds, particularly as the people who provide the tech are typically on one side of a deep gap, and the people who understand the problems it could solve are on the other.
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“In some ways, it’s unclear what problem [blockchain is] solving,” says Stephen Rutenberg, a partner at Polsinelli. “On the intellectual level, it’s fascinating. The idea of self-executing contracts is just fascinating for so many legal areas.” These are contracts implemented in executable software that can take actions when the conditions fit, for example, making payments at particular times.
“In some cases, it’s a philosophical question. Is a self-executing system more fair [on its own], or is it more fair with human involvement and some control?” Rutenberg added. CRE has a long history and highly established chains of processes. There are inefficiencies but that has some benefits. There are parties that can step into a process if something is going wrong, for example.
Rutenberg mentions Bitcoin as a technology that allows the transmission of an original without an intermediary or verify a transaction. “It’s not foolproof,” he says. “Even to the extent one is, do you want that, or do you want recourse? Intermediaries allowed the world to develop to where it is.”
That might be the biggest point. With paperwork and inefficiencies, there are ways to address risk. Speed and more efficiency are not necessarily better if they can enable disaster to happen. Automating not past that but through it for a robust approach takes a long time to happen.
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