Many people believe that the finance system revolution is already underway and that crypto coins are the currencies of the future. Keep up with everything you always wanted to know about crypto coins and blockchain and their use in the commercial property market.

 

The possibility of undertaking a transaction without going through an intermediary such as a banking institution is the concept underlying the first phase of the manifesto that created the bitcoin, the first cryptocurrency. Signed by the mysterious Satoshi Nakamoto, the bitcoin whitepaper was the first document to combine the idea of a digital asset (cryptocurrency) with blockchain technology. And if this idea seemed revolutionary in 2008, ten years later general

knowledge of cryptocurrencies and blockchain is still limited.

Nonetheless, sentences such as “how I wish I had bought bitcoins in 2012” stoke up interest in the topic. That is because someone who invested 1,300 dollars in 2012 (100 bitcoins) would have seen their investment grow to a tasty

1,790,000 dollars in December 2017. However, the volatility of the cryptocurrencies is not for the faint hearted. Prices oscillate regularly, as there is no balance between supply and demand and no control over their price. On the other hand, it is an investment that is very susceptible to news stories.

Even then the future seems to smile upon this disruptive form of investing. At the moment there are over 1,600 virtual currencies with a total estimated capitalization of over 450,000 million dollars.

 

Stability is confidence

One of the main criticisms of cryptocurrencies is their value is not indexed to anything tangible. However, formats are beginning to emerge that contradict that tendency. They are known as stable coins and their value is indexed to a predictable asset.

With Digix Gold Tokens (DGX), for example, the unit is linked to the price of 1g of gold certified by the LBMA. This cryptocurrency is based on a blockchain technology smart contract and brings greater transparency and control over investment in gold. On the other hand, it is an asset that has greater liquidity than physical gold because it operates in a market that never sleeps. In the same manner cryptocurrencies based on real estate assets have begun to appear.

 

How can smart contracts and blockchain be applied in the commercial property market?

Smart contracts are software protocols based on blockchain technology designed to facilitate, verify and execute a contract. The classic example is the purchase of a property. A smart contract within a property investors network allows documents to be read, checked, ordered and confirmed instantly by way of a series of predetermined steps.

From the moment the buyer and seller agree to the sale the contractual terms are triggered when the buyer’s capital arrives in the seller’s account. Lastly, the contract is executed by itself.

When managing assets blockchain technology allows information on tenants, leases and premises to be visualised, managed and updated in real time across the network, so as to produce analysis reports. In terms of investment, the blockchain technology has the ability to supply a transparent database of owners if all the transactions are housed on the same network, thus allowing all agents to find investments that match their profiles in an efficient manner and focused on adding value for their clients.

Glossary

Cryptocurrency

A digital asset backed by
cryptography to ensure
greater security for online
transactions. Transactions are
anonymous and cannot be
controlled by any banking entity.

Blockchain

A technology based system
with an indelible record that brings
together all information

needed to process,

validate and protect

transactions.

Wallet

The program through which
it is possible to store one
or more virtual coins, make

transfers and check one’s
balance. It is a kind of
digital bank account.

Mining

The process of validating transactions.

It is undertaken by

users who loan their

computers to ensure

blockchain security

and who are rewarded

for this.

Block

A block is the name

for a cryptocurrency

transaction that

is submitted to a

blockchain.