The Three Dynamics of Crypto Destruction and Commercial Real Estate.

What are the three dynamics of crypto destruction?

There are actually four but that may be for another day.

Let’s get right to it.

1. Value and ownership.

This is the basis for all the value created, and will continue to do so until when? Until the market decides there is not.

Let’s simply this and look at one individual building.

Building A is a 20 story Class A office building in one of the top 10 US markets.

It has a value today of say $100 million.

That value is based on how many factors in today’s terms? Almost too many to list.

Take that same Class A building and calculate the data that it creates. Do you know how to do that?

What is the “real value” of this property?

What if the data is worth more than the physical structure? I have been on this horse for four or five years now.

Now take that and put that data in a secure and tradable environment. As in (Crypto)

Turn that data into tokens. What is the value of that data then?

Staying with me?

Wait, is that another source of revenue and create value? Yes, it is. People one hell of a lot smarter than me have already figured this out.

How about just the security and storage of that data/tokens. Almost and dare I say it a commodity. That to me is #CRE digital GOLD!

How about ownership? Of the structure itself. How about ownership of the “#CRE crypto commodity.”

-As a side: How long before #CRE or Propcrypto commodity ends up in a white paper? Remember you saw it here first. I just made it up right in front of your eyes. There are no rules.

To keep your brain on point throw in Regulations and Crypto Exchanges.

How frothy is that marketplace?

2. Decentralized infrastructure.

And that means what to you?

It means that the business of #CRE must create a market and to find ways to reduce costs, build better products, and invent radical new ones to succeed.

Wow, that seems like an impossible task as #CRE sits here today. We are real estate people, not product and software, people. Or are we?

What if we are the best positioned “stake holders” out there? We are in my opinion and we have access to what? All the data and structures.

Here is the formula in clear and simple English. Open network + shared data (layers) + incentivized tokens = ADOPTION.

Let me highlight that again for you.

Open network + shared data (layers) + incentivized tokens = ADOPTION.

This does what? It creates different business models. It does not allow anyone anything or any company to dominate. It may also (no it definitely will) create an entirely new category of real estate companies.

3. The Stack.

What is the typical stack of commercial real estate technology right now? Yes, I understand that depends on whom you ask.

From an institutional and or enterprise point of view, what has really changed in the last few decades? Not much for that matter. What aging and obsolete infrastructure still exists because it can? What other possibility is there for broader scale and operability?

An entirely new technology stack can and will be created. What basic efficiencies and advanced processes will be realized? It’s hard to imagine how far they could go. Or is it hard to imagine how the entire system worked before?

The basic questions for #CRE have been “What is this Blockchain thing again?” “Why should I pay any attention?” “What should we be looking for?” And now it’s “how do we use this to trade, invest and create more value for commercial real estate.”

Incredibly smart people are now creating what is a new class of commercial real estate.

Will some of it stay the same? Sure and why not. Then again why would or should it? How could it possibly compete?

There you have The Three Dynamics of Crypto Destruction and Commercial Real Estate.

It’s only going to get better.

 

 

+1 The fourth one? Getting Paid! Yeah, how about that?

+1+1 Are we going to hold hands and just watch?

  • David Music

    I’m loving your series on crypto and CRE. I’ve been following BTC, ETH, ETC, LTC, etc for years and completely buy into the value. I don’t just follow, I also have invested some. I’m also completely on-board the separate blockchain bandwagon. Individually each piece has value and together they have even more. Makes sense. The tokenization of Ethereum adds that much more value with the ability to program in smart contracts/apps.

    The problem becomes the ownership side in your above equation (specifically in regards to CRE). The physical building worth $100m can show how that value is shared between different owners. On the data side, the value of the data will have a harder time splitting how the value goes to different parties. It’s the Google News argument all over – is the value from the search results (Google), the content (media companies), the pipe that delivers the info (ISPs) or some other party? In the long-run Google ends up reaping most of the benefit while delivering a secondary benefit to media companies (traffic/clicks on specific articles) that they have to figure out how to independently monetize.

    Said another way, the value of the data around a physical building will likely not actually contribute a significant amount back to the physical building owners in the long-run. The value of the data will be allocated largely to those technologists who are best able to surface it and provide it back to others for use in currently unknown applications. In the short-term, early adopting owners may reap a windfall as their initial data will have intrinsic value that they can directly monetize but as more participate the value of each new data point/element becomes less valuable. The smart money (for owners) is to either be in the first 1% of adopters or to stay out entirely. Of course, this begs the question, is 1% adoption enough for create momentum for others to participate or is some greater threshold the minimum needed for the data platform to take off?

    This is just where my head is around the topic. I’m struggling to really find the incentive for 20%+ of the CRE building ownership community to provide their data to power this. Separate from that, everything else works and makes perfect sense. Would love to see your thoughts on incentivizing this behavior as a future post.

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