Real Estate Journal — Financial Digest — Creative Financing — June 8 - 21, 2018 — 15A
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M id A tlantic
C reative F inancing By Kevin Shtofman, Deloitte US Blockchain is coming: Is the world of Real Estate ready?
T
he last time I wrote in this journal, I dis- cussed why Block-
technology in a business con- text, incorporating the con- sortium-building challenges, the regulatory and legal envi- ronment and the integration cost, among others. A proof of value is the strongest case for implementing Blockchain technology at a company. Proof of Concept Perhaps the business case is unknown, or the pain points are not seen as near- term critical, but it is re- quired to learn the value of the technology. Proofs of concepts are good to “play” with the technology to bet-
ter understand its potential. When you engage in a Proof of Concept, you need to keep in mind that demonstrating the technology benefits is now the easy part and that you will ultimately need to do a Proof of Value. Proof of Curiosity Also known as “Blockchain Tourism”. Maybe your CEO told you to do something with this “blockchain thing” and you picked a business pain point within your orga- nization. You could address the same pain point with other technologies but this is
more fun and the CEO asked for it after all. Be aware of the long-term implications: can you justify this technol- ogy choice in 12months? Will you damage the credibility and thus the future potential value of Blockchain within your organization? Do you have a plan to apply lessons learned to run a Proof of Value? Proof of Incompetence Weak business case and low technology fit is not a good place to be! You have better things to do and a job to keep! Maybe another way
to consider proof of work ;-) As you evaluate business opportunities, have an hon- est view of where each op- portunity lies on the spec- trum. As we like to say in our practice, think really big, and start really small. Limit the variables and test a use case If that use case is successful, you may now expand the number of users, geographies, and/or func- tions that are encomapssed on the platform. Kevin Shtofman is Na- tional RE Blockchain Lead at Deloitte US.
chain tech- n o l o g y i s piquing the interest of the gl obal real estate community. Not only de- velopers, but ope ra t o r s ,
Kevin Shtofman
investors, and asset manag- ers all see potential value… but are they seeing with clear eyes? Tons of promises have been made as to the disruption Blockchains will bring to residential and commercial real estate. In discussions I have had with various firms over the past 12 months, the same sets of questions arose: 1. Is there a strong busi- ness case: What parts of the busi- ness are broken and in need of fixing? What challenges and opportunities is Block- chain technology address- ing? Where can a Blockchain generate new sources of profitable and sustainable revenue? What are the risks associated with building or using a Blockchain and are they too high? 2. Is this the best tech- nology fit: Is a Blockchain actually the best fit for the solution… or could this be done with a better database, a bet- ter workflow, and maybe a better team? Or does this require a consensus based distributed platform where many parties write to a single ledger and trust that platform to help run their business? Why these two sets of ques- tions above all others? In to- day’s business environment, real estate companies rely on budgeting and forecasting to determine not only how they will make money, but also how they plan to spend it. Unless there are limit- less resources, companies need to make hard invest- ment choices. A former col- league of mine created the belowmodel to help arrive at whether developing a Block- chain is the right answer: Proof of Value A strong business case married to a high-level tech- nology fit. The goal is to demonstrate the value of the
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