Platform economy: How blockchain technology enables data security
The blockchain technology discussed here was first released to the public in 2008 in a white paper by Satoshi Nakamoto. The goal was to demonstrate that financial transactions could be conducted digitally and instantaneously across borders without intermediaries or government regulation but with the same level of security as transactions through banks or using cash. The technology underpinning these goals also enables an unprecedented level of transparency, since the participants in this payment network can trace all the transactions executed.
After a slow start, blockchain technology began to gain visibility in 2013 when the initial idea was expanded to incorporate not only payment transactions but also the secure transfer of other assets. This was enabled by smart contracts: self-executing, specifically programmed contracts based on computer protocols. These smart contracts serve to digitise contracts and other documents so that IT systems can not only interpret but also independently execute them, since the contractual conditions and agreements are written as lines of code. This eliminates both the loss of documents and erroneous interpretations (provided that the smart contract has been correctly programmed). Terms like “Internet of Value” or “Web 3.0” are often used in this context: if these smart contracts are stored using a blockchain, then the shared data can be safely downloaded in a form that is safe from manipulation or forgery, in contrast to the conventional sharing of content on social media or blogs.
The ongoing advance of digitisation is seeing all companies produce enormous amounts of data that simply lie around unused in most cases. But everyone has now realised that data itself is valuable, as expressed in the oft-quoted saying from 2015 that “data is the new oil”. Not all the data generated is sensitive, but the rise of the platform economy is raising the importance of secure methods of data exchange.
At least in the case of blockchain, though, this technology seems to attract only limited attention in day-to-day business and the mass market once the initial hype has died down. This may be because the blockchains on the market thus far have been unable to replace conventional databases, partly due to their low throughput of only a few transactions per second. This will be changing soon, however, and the companies that engaged with this technology early on are set to launch market-changing products. When this happens, we will have reached what is commonly referred to as the “iPhone moment” – though the iPhone was no mass product at first, it triggered a rapid shift in the telecommunications industry, with touchscreens usurping conventional telephones.
What does this mean for the real estate industry?
The iPhone moment may not have arrived just yet, but digitisation is by no means leaving the real estate industry untouched. Far from it – digitisation is changing our society, economy and politics. Digitisation entails the comprehensive penetration, integration and alteration of virtually all areas of life and economic activity through information and communications technologies. It stands for the ability to collect and analyse information and convert it into actions: communications, transactions, interactions. Compared to the past, processing steps are increasingly occurring simultaneously – in real time. This enables enormous productivity gains but also increases the speed of change – in all areas and at every level.
New data, networking, the use of artificial intelligence and the digital customer interface are changing existing value chains. Value creation no longer occurs in a set sequence on a time delay, but in a real world where largely self-organising units are constantly communicating and reacting. This new world is managed through platforms to make services and network effects available to users. Due to the complexity of the technologies, no single company can control all the system elements. Services and products from other companies can be embedded through an API (application programming interface), enabling collaboration between various technology systems and platforms. Companies like Amazon, Google, Uber, Alibaba, etc. already appreciate the power of digital technologies today. Their strongest innovations, however, are not products or services, but collaboration through platforms.
This platform economy will also sweep across the real estate industry, transforming processes. It will be crucial here for companies to share their own data when called for and to ensure that it cannot be manipulated by third parties. And this is precisely the strength of blockchain technology. Sensitive data can be made secure through a blockchain. The data owner can decide who is granted access to which parts of their data. New fee models will emerge here, since data itself has intrinsic value. A distributed network that works with encrypted data additionally provides protection from hackers, since there is no single point of failure. Because all participants in a given network have the same information at their disposal, hackers can currently inflict only limited damage (if any at all).
Purely as a technology, blockchain works securely and works well, and its value can no longer be called into question. There is still room for improvement in terms of collaboration within and across industries, since the silo mentality is narrow and limiting. Lack of trust is one of the main causes of silos – transparency, reliability, independence (e.g. from intermediaries), security and increases in efficiency can be realised through blockchain, pointing the way to the platform-based collaboration of the future. It offers a unique chance to leave behind “winner-takes-all” philosophies and the “iPhone moment” in favour of cooperating towards a world where we all become winners. Let's get to it!
- Nakamoto, Satoshi (2008): Bitcoin: A Peer-to-Peer Electronic Cash System.
- The Bitcoin blockchain can conduct 3–7 transactions per second, and the Ethereum blockchain is capable of 15 transactions per second. In December 2019, however, the Ethereum Foundation announced that, in the near future, the Ethereum blockchain will be able to process up to 3,000 transactions per second. This is slated to be possible in summer 2020. Other providers are also working relentlessly to achieve higher transaction rates so that blockchain can soon stand proudly in comparison to conventional approaches in terms of transaction rates.
is a professor at HTW Berlin specialising in general business administration, investment and financing, real estate and blockchain technology. She is also the founder of a start-up that develops blockchain-based applications for the real estate industry. In this capacity, she is working on a blockchain solution to increase the transparency, efficiency and speed of real estate transactions. As an internationally renowned speaker and expert, she shares her knowledge in engaging, practice-oriented presentations on the endless possibilities of blockchain technology.
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