Speaking about the advantages that blockchain technology could provide to Vietnam’s property market, Matthew Powell, Director of Savills Hanoi believed it could “increase the efficiency of real estate transactions”.
Blockchain allows information relating to a series of transactions to be distributed across a network of computers (known as nodes). Blockchain generates digital records that are shared, transparent, rapidly updatable and very difficult to hack.
“Property transactions are generally quite chunky, so traditionally it takes a lot of time, paper work and fees to complete transactions. This creates liquidity and transparency issues in real estate market. Blockchain has the potential to be a game changer. By digitalising transactions, time and costs are reduced whilst transparency and security increases," said Powell.
A crucial element is that blockchain eliminates the need for a central authority to approve transactions and verify identities as the ledger for transactions is distributed over a network, which makes a transaction harder to falsify.
The benefits for real estate could be huge as title searches and transfers could be verified instantly. This will be particularly important in Asia’s developing markets, where security of title is a major headache for investors. Incomplete, out-of-date land registry information could become a thing of the past.
He added: "Although the application of blockchain is in early stages worldwide, I believe Vietnam has the potential to quickly follow this global trend, as the population is young and eager to embrace new technology whilst policy makers are aggressive and forward-thinking."
According to the Bank of International Settlements (BIS), crypto-currencies would never be a realistic substitute to mainstream currencies as they were too volatile subject to too much manipulation and fraud. At the same time, Bitcoin mining uses too much electricity same as in Switzerland, which are harmful for the planet.
Blockchain coins or tokens can also be used to share office space. European company Primalbase operates a tech-flavoured coworking business, which is set to open in Singapore this year. Occupiers gain access to the Primalbase network by buying one of the 1250 coins in issue, thus stabilising office costs.
“Buying a Primalbase token is a one-time fee for life membership which provides you free and unlimited access to amenities: Internet access, digital printing, meeting rooms,” the company says.
The most desired use for blockchain technology looks at present as the least likely to succeed. Using blockchain to fractionalise ownership of real estate would massively increase liquidity.
Powell added: “Tokenising properties could offer individuals access to large commercial buildings like Grade A office developments or luxury hotels, which previously were out of their investment reach."
However, at present using the technology in this way subjects investors to the vagaries of the crypto-currency market. In addition, this is before regulators in Asia Pacific get to grips with cyber-currencies; the attitude of the BIS demonstrates that blockchain transactions will remain on the fringes for the time being.