The way that we think about money and transactions is about to be completely transformed thanks to emerging technology, which will also completely transform the corporate world, the economy, and the commercial real estate market in ways we have never seen before.
The Concept of Cryptocurrency and Blockchain Technology
The primary idea behind cryptocurrencies is that data blocks can serve as a de facto currency. The generation of new units and the authenticity of monetary transactions are verified through cryptography. Bitcoin was created by a mysterious individual or group of individuals named Satoshi Nakamoto. The plan was to make virtual currency a way to send and receive money online without needing a bank or other intermediary.
What would eventually become known as blockchain technology has its genesis in the concept of cryptocurrency.
Blockchain is a distributed, replicated ledger that records and disseminates all transactional data. Information is safeguarded from loss, alteration, and deletion when encoded in digital form and kept in shared, public databases. While its primary purpose was to streamline financial dealings and document transmission, the technology can accommodate various data.
Nexus Code
Although similar to the popular Bitcoin payment network, code frameworks like Nexus aim to build a much more robust system. It is done by incorporating various features to strengthen encryption, speed up transaction times, create a more decentralized mining industry, and fix contract difficulties via scripting engines.
Kierre Reeg, a significant investor in Nexus for the past year and a half, is working to address the problems with contracts and payments afflicting our current infrastructure.
According to Reeg, a nexus is a social framework that facilitates communication between individuals. Blockchain technology is founded on a cryptocurrency and will support additional layers, such as contract scripting engines, that will allow for creating digital financial contracts or recording property title data.
Future Outlook for Cryptocurrency and Blockchain
This method introduces a great deal of flexibility and has the potential to alter the functioning of the entire economic system radically. However, given the technology’s revolutionary nature, it will take significant time before its full potential is realized. According to Reeg, the evolution of blockchain technology is only getting started. He thinks we are still in the early stages.
The rate at which blockchain technology and cryptocurrencies are adopted could be affected by various factors, including economic downturns, negative interest rates, and changes in monetary policy and currency regimes brought about by governments.
Reed elaborated, saying that the system needs to move slowly, and everything needs to be tested and proven in the wild before extensive usage. There may be a 20–30 years delay before this technology becomes commonplace. Widespread acceptance, which he defines as roughly half of world monetary value among the many cryptocurrencies, is something he believes is possible in shorter time frames, as well as in other scenarios.
He predicts that there will be anywhere from 20 to 30 distinct cryptocurrencies in circulation by the decade’s end, with the top ten accounting for the vast majority of the related market cap. Digital assets, such as Ethereum ERC20 tokens employ the technology of another currency to facilitate value transfers, and he defines a cryptocurrency as a blockchain that provides its technology.
However, hundreds of thousands of digital assets may exist via blockchain in the future. Real estate, startup firms, publicly listed stocks, and bonds can all be “tokenized” and traded on the blockchain.
He thinks that the number of transactions in the world will keep increasing exponentially, and there will be all kinds of different tokens, Reeg declared. The entire banking system will undergo radical change as a result of this. And it will affect the economy in myriad subtle ways.
Blockchain Technology in Commercial Real Estate
Two of the most significant changes brought about by blockchain technology for commercial real estate are the enhancement of liquidity and the possibility of fractional ownership.
Imagine liquefying all asset classes; that’s what this represents, Reeg stated. Being able to convert your assets into cold, hard cash at any time gives you a significant competitive advantage if you have access to such liquid assets.
Although you can change real estate for other assets, it is not as liquid as marketable securities such as stocks and bonds. It’s more difficult and time-consuming to get things done. However, because of the decentralized nature of blockchain technology’s data and currency storage mechanisms, property transactions can take place faster.
Furthermore, regarding the fractionalization of commercial property, it boils down to producing several “tokens” for a single property, with the option of having multiple people acquire pieces of an asset.
We believe the implications of this technology are enormous and could significantly alter the way we do business.
Say you own 100 commercial properties. Instead of making a private REIT or an offering where someone would have to buy in, they could instantly buy or sell a portion of that portfolio, or even of a single property, Reeg described.
A significant rise has occurred in the speed with which commercial real estate is traded and invested recently. As a result, the real estate market is poised for dramatic change.
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