Dave Marcinkowski is a founder/partner in Madeira Residential and Quext, focused on creating smarter, healthier apartment communities.
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Have you ever tried to describe the concept of cryptocurrencies to the uninitiated? What about blockchain technology and non-fungible tokens (NFTs)? The attempts may lead you to irritating conversations where you have to re-describe how cryptocurrency works like regular currency, but is not held in a bank – defining ideas such as fungibility and convincing others that it is not a scam.
Confusion and skepticism often precede a transformational innovation to become a fully accepted and valued norm. Granted, cryptocurrencies have seen a few bad apples in the bushel lately, but the concept and underlying technology are far from flawed. I and many others believe that cryptocurrency will be the next big step in making payments and storing and verifying transaction information. As more use cases emerge, it has the potential to move from the realm of the far-fetched to the standard for secure global transactions. This also applies to the multi-family industry.
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Blockchain technology is tailor-made for the multi-family industry.
The multifamily housing sector is one sector that could benefit richly from blockchain innovation. Some progressive real estate owners are already accepting Bitcoin and other cryptocurrencies for rent payments. Others use crypto to invest in new properties and have their transactions securely recorded on a blockchain. When will the rest come on board?
I think blockchain is ideally suited to handle property insurance, deeds of transfer and other sensitive data surrounding real estate transactions. In this method, all transaction records are linked together using cryptography and stored in a chained block. Once recorded, the transaction cannot be changed in any way, ensuring a secure, easy, accessible and visible distributed ledger process. Blockchain provides immediate insight into the exact transaction date, amount and remaining account balance. There are already 44 million users of blockchain wallets worldwide, more than half of which have been created in the past five years.
In the face of rising cybercrime, it appears that the appeal and inherent data control behind self-sovereign identity (SSI) will see this trend become standard practice. Self-sovereign identities are digital identities that are decentralized. Users can manage their identity and personal information themselves without using third-party providers to store and centrally manage their data. Crypto, blockchain, NFTs and SSI technologies are innovations that promise to revolutionize multi-family real estate and how we buy and record transactions.
The matrix of functions surrounding blockchain technology and cryptocurrencies can create an ecosystem for how we live, buy, invest and achieve personal goals. Use cases go far beyond mere rent payments. In the near future, here are the applications I see for these emerging technologies in the multi-family industry.
• Use of blockchain for signing, recording and archiving rental agreements and other rental-related documentation.
• Extensive use of crypto for rent payments and secure transactions via biometrics on smart devices.
• Democratizing real estate investment allowing anyone to make fractional and incremental crypto buy-ins and transactions.
• Tenants invest in their own rental units, leading to better property management and personal gains when the property is sold.
• Property operators offering crypto and NFT rewards and incentives for on-time rentals, referrals and early renewals in the form of NFTs for furniture, art, community shops and restaurants, on-site amenities and partial ownership.
• Property owners supporting their local environment by delivering NFT pop-ups on residents’ phones to local shops, grocers and events, creating a sense of community and convenience that appeals to current and potential tenants.
Multifamily operators should not wait to embrace the future.
A multi-family home can become the perfect example of this modernized lifestyle, as more and more future residents will own cryptocurrency and seek environments that accept its use. By the end of 2022the largest cryptocurrency ownership group will be the adults aged 25 to 34, followed by the 35 to 44 age group, which also happens to represent the largest demographic of rental ownership.
The multi-family sector needs to be motivated to embrace a blockchain ecosystem to exploit its future potential. Multifamily operators can start today by choosing and accepting a cryptocurrency for rent payments, experimenting with NFT offerings and incentives, and cultivating a community environment to attract the next generation of tech-savvy and convenience-driven residents. When that happens, you won’t have to spend much time explaining NFTs, because they’ll probably use them themselves.
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