Smart contracts enable us to use the blockchain to lock in instructions contingent on something happening. If a certain price is reached, sell. If the package arrives, pay. If someone uploads a document that contains a specific sequence of words, send that person an image. I’ve written about smart contracts before, so I won’t go into much more detail at this stage. Today I want to talk about smart property.
Smart property is an extension of smart contracts. An interesting extension that could change our relationship with objects, and push the Internet of Things into practical, interactive uses.
The idea that physical things have technology embedded in them is no longer new. We have all heard of smart lightbulbs, smart clothing and smart trashcans that gather data, transmit and occasionally talk amongst themselves. So far, most of the uses for the Internet of Things (in which objects have sensors and link to other objects) have been about collecting information and transmitting data. Smart bus stops gather statistics about public transport use in specific areas, and can keep users informed about times and routes. Smart mattresses can record sleep patterns and help to diagnose any problems. Smart cups record how much liquid you consume, and advise you how on you’re doing compared to the ideal.
Smart property contracts, however, embed decentralized blockchain technology into objects, and make the relationship more interactive. Instead of giving the objects a data-collecting life of their own, they increase our control over their use. Smart property contracts can dictate the extent of our ownership and control over networked objects. And they do so in a decentralized, efficient and automatic way.
Perhaps you have had the experience of renting a car with RFID (radio frequency identification) technology, which gives you access to a vehicle without even passing through the rental office. Efficient and very clever, it saves the user and the rental company time, and makes it easier to track the cars and their use.
The smart property concept is even more efficient, in that it unifies the rental contract and the access in one tiny piece of code. If this amount is paid, open the car door for the bearer of this sequence of characters.
It is also more revolutionary, in that it opens up the rental field to just about anybody. With the current RFID system, the business structure does not change. You still pay one of the established car rental businesses, and they decide if you get access to the car, and to which one. It’s still a centralized system in which they own the asset and they decide who gets to rent it. And it’s limited to the big players, since the investment needed to kit out fleets of cars with the necessary technology is substantial. Smart property opens up the field to individuals or small businesses. Investment in technology will be necessary, but will be limited to the lock automation and the readers. Since smart property contracts run on open-source blockchain technology, no expensive proprietary software should be needed.
The concept enables the blockchain to become a tool for managing property rights. As with cars, it could make apartment or house rental agreements more secure. Computer rentals. Bicycles. Power drills. The “sharing economy” could get a boost as the hassle of renting out items when we’re not using them is significantly reduced.
Established sectors could also benefit from the potential efficiencies. Hotels, for example: imagine not needing to pass through the check-in desk. Your public Bitcoin address becomes your room key, and payment is automatic. Access automatically expires when your departure date rolls around.
And smart property can extend the use of credit, by removing trust from the equation. Smart objects can be used as collateral. The lender can program the restriction of access to a car or a property if payments are missed. While that sounds harsh and slightly dystopian – consequences with no human intervention and no room for appeal – it would make it easier to get loans and concessions, with less risk for the loaner. Access to car loans, loans for residential or commercial rent, etc., gets opened up to a much wider potential base, with all the social and economic benefits that that implies. In theory, anyway. Obviously, legal challenges would need to be ironed out, but the business potential is sound.
Even more potentially interesting is the impact that smart property can have on business structures. By “democratising” use of property and programming conditional access, the concept could give rise to new types of group governance, decision making and rule enforcement. New types of ownership structure could develop as a result, which would lead to new types of markets. The impact of Bitcoin and the blockchain could well be even deeper than most Bitcoin enthusiasts realise.