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What effect will Bitcoin have on the office rental industry?

23 January 2018 21:00, UTC
Henry Wisbey-Broom, Public Relations & Communications Manager, Freeofficefinder

Real estate and office spaces rent might improve thanks to Bitcoin and blockchain

As the value and prominence of Bitcoin and cryptocurrencies has risen, questions are understandably being asked about what they could mean, and how they could be used, in a range of industries, from finance to ridesharing. In the commercial property and realty industry, tentative steps are being made toward assessing their potential impact, but the office rental market’s relationship with Bitcoin is still ultimately in its infancy. Same can be said about the relationship of Bitcoin and real estate.

The applications for cryptocurrencies for the commercial property industry can be broken down into two broad categories – the potential uses of the currencies themselves, and the possible uses of the underlying blockchain technology.

Cryptocurrencies & coworking

FreeOfficeFinder Ltd. recently conducted research into which coworking spaces across the globe accepted Bitcoins and other cryptocurrencies, and though the number of spaces allowing Bitcoin as a payment option has grown in recent years, it remains, in relative terms, a tiny fraction of the overall market. Indeed, in many senses the decision to accept cryptocurrencies by office space businesses can be read largely as a marketing decision or a statement of values rather than as a commercial strategy.

Though the number of companies conducting transactions using bitcoins has been steadily growing, the questions over the long term viability of cryptocurrencies as currencies, rather than stores of value, combined with the price fluctuation and high transaction costs means that coworking spaces have by and large been hesitant to embrace this new trend.

The blockchain and the commercial property industry

In 2017 Dutch coworking business closed an ICO selling ‘Primalbase Tokens’ – a digital blockchain-enabled currency that entitled its owner to lifetime membership in one of the company’s offices. The owner also has the right to sell the token, or rent it to other users. Though not necessarily a radical business model, the inherent advantages of blockchain technology – its transparency and in-built trust – make it far easier to facilitate certain kinds of peer-to-peer relationships within the commercial property industry.

Similarly, Coinspace, which is, according to Technical.ly, the first blockchain coworking space in the United States aims to be something resembling a blockchain-based co-op. Founded by Solomon Lederer, Coinspace is aiming to run its governance and operations entirely through the blockchain, a mini crypt-democracy.

In both cases, the primary effect of the blockchain so far has not been in radical disruption but rather in the easing of certain kinds of democratic peer-to-peer relationships which previously had faced onerous bureaucratic and commercial barriers.

As Dmitry Faller, chairman of the advisory board at Primalbase noted recently in an interview, ‘the entire shared workspaces model and the whole idea of constructing such a workspace does not need to implement blockchain.’ It’s not about radically disrupting everything in sight – instead, the real use of Bitcoin is as a ‘way to provide services and access to the infrastructure.’

Ultimately, the commercial property industry has by-and-large taken a wait and see approach to blockchain and cryptocurrencies. Though there are some pockets of innovation, particularly in companies seeking to utilise the blockchain, the lingering questions over the long-term viability of cryptocurrencies means that for now at least we are unlikely to see a significant market-wide adjustment.