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TODAY'S OTHER NEWS

PropTech Today: Facebook's own currency to drive rental transactions

Facebook is set to enter the cryptocurrency business with the big reveal of its formal plans scheduled for some point this week.

Its whitepaper containing the details may well have been released by the time this article is published.

It's likely the move will focus on Facebook’s cryptocurrency, rumoured to be called 'Libra’.

The question is why you as a residential agent need to know this sort of information?

A major part of Libra will be the ability to transfer funds via Facebook and its sister apps such as WhatsApp and Instagram.

For residential real estate, and especially the rental sector, this may well turn out to be a milestone event remembered in memoriam.

But what exactly is crypto, and what should agents be doing with this news?

Why is this story important for agents?

Cryptocurrencies, the most famous of which is Bitcoin, are digital currencies which work like any other world currency but benefit from engaging with blockchain.

This means that fraud is pretty much impossible as all transfer records are preserved and protected by the blockchain. Oh, and cryptocurrencies are entirely digital. They cannot be held in the hand. However, given that traditional money is rarely used in its physical format anymore, this won’t take much getting used to.

Each cryptocurrency has its own value which fluctuates over time just like traditional exchange rates. It is seen by many as the smartest way to invest money today.

The fact that Facebook is launching its very own currency speaks volumes for how influential blockchain is going to become. Why does this bother agents? Simply, if Facebook is so interested, we can be fairly sure it’s set to be a big deal. Libra is expected to launch next year, so now is the time to take action.

Facebook and other social media platforms have already become rivals to traditional property listings portals and agent windows and the arrival of Libra will likely boost this even further.

If the public can now search, find, and pay security deposits for a new rental home, entirely surrounded by the security and familiarity of Facebook, social media quickly becomes a serious rival to traditional property professionals.

As an agent, the vast majority of your audience is on Facebook. If you’ve not already got a good Facebook presence, you really need to get one now. Because, when the world starts buying everything through social media, if you’re not there too, you will likely be forgotten.

What should agents be doing right now?

Assuming we’ve got 6-12 months before Libra is fully launched, agents need to be learning about the use of blockchain and cryptocurrency in the context of speculative consumer capitalism. As an increasingly vital part of the digital transformation of real estate, I’d like to think a lot of you have already done this.

The scope of blockchain’s potential is enormous, transforming ownership, privacy, security, and creating what most blockchain experts refer to as ‘digital freedom’. I can strongly recommend this web page – it succinctly outlines the key benefits of blockchain.

Once that’s been digested, attention needs to turn specifically to each agency’s relationship with Facebook and customer engagement.

If everyone is going to be renting via Facebook, or at least transacting through Facebook, how do you make sure you’re one of those they’re renting from?

First of all, you need to start thinking of Facebook as a serious real estate platform. Consumers are so enamoured by the tech giant and its services that the success of Libra is a no-brainer. It’s no good thinking of this new threat as a passing fancy, it needs treating with respect.

We have seen Facebook trying to enter real estate previously, and directly. Now it is more indirect. We have also seen Facebook being used as a marketing medium, and a successful one at that. Now it will become the facilitator of the transaction.

Therefore, your attempts to engage with users over Facebook must not be half-hearted. Unfortunately for some, in the world of social media, being full-hearted often means being creative with how you gain the attention of your audience.

This is also worth preparing for: when Libra launches and you’re suddenly competing for a brand new, excitable market, how are you going to stand out from the rest? How are your properties going to stand out from the rest? And how will the rest of the service you provide match up to the speed, ease, and efficiency of blockchain? Because it will have to...

How will it actually work for agents?

I think the actual process will be quite simple. I’m no blockchain expert (I gave up on learning the specifics of the technology itself about five years ago) but simplicity is one of its main selling points.

An agent will have a Facebook profile and this will be linked to a bank account, much like eBay or Etsy. These accounts, however, will only house and transfer Facebook’s Libra currency. When a potential renter finds a property via Facebook, they can then send the agent any monies directly through the platform or, more likely, its associated messenger app.

The result will be seamless efficiency and an absolute absence of fraud or bouncing cheques. For agents, there is no real downside, all you need to do is be ahead of the game in terms of having a Facebook presence and finding some creative ways to market yourself on there.

A quick word on engagement: people on social media love nothing more than videos. On Instagram and Facebook, viral images might encourage 500,000 engagements, whereas videos keep racking up into the millions. It’s something worth bearing in mind when planning your strategy.

The future is crypto

I can’t encourage agents enough to be ahead of the curve with this. And not only because of this Facebook news, more because of what this news signifies.

The fact alone that Facebook is showing so much interest in crypto will almost certainly spark faster and wider adoption of the technology across society as a whole.

It will soon be present in our daily life like contactless payments are now. Facebook’s influence is big enough to help push blockchain and its associated technologies out of the underground and into the mainstream.

Before Cristiano Ronaldo, no footballers were pulling up their shorts in that all-too-revealing way that he’s known for - now they’re all doing it. This crypto stuff is just like that.

It’s worth noting that Facebook won’t be the only ones to try offering this sort of thing. We can expect the same from players like Google and Twitter. But Facebook is uniquely placed to actually make it work to the benefit of its users.

Cryptocurrencies are notoriously volatile and high risk investments which bring boom or total bust. However, there are also those which are collectively known as stablecoins, cryptocurrencies which are more stable as a result of being linked to a traditional world currency such as sterling or the US dollar. Given how much money Facebook has in the bank, Libra will likely be a stablecoin, supported by the billions of US dollars Zuckerberg and co. have racked up.

Furthermore, there is a huge incentive to become a key player in this emerging market because all purchases made through Facebook, using Libra, will be recorded by the social media giant and used to improve what is already astonishingly valuable consumer data.

This data is everything to Facebook because it fuels its number one revenue-driver, targeted advertising (worth noting briefly here that Facebook’s targeted advertising abilities will also be a great benefit to agents using the platform to generate leads and close deals. Another reason to get on there right now!).

To conclude - what might seem like a techy story with little blowback for real estate is actually a forewarning that things are about to radically change. This is when the fact that real estate is far from the most advanced industry in the world is actually a benefit - we are able to see these things coming over the horizon, we are able to prepare.

*James Dearsley is a leading PropTech influencer and commentator, and is co-founder of PropTech platform Unissu. You can follow James on Twitter here.

  • Simon Shinerock

    Hi James. When Crypto went mad I made it a project to learn all about it. I bought Verge, Ethereum, Bitcoin, I participated in a initial coin offering with Token pay.and some business acquaintances even created their own offering Lendo which I passed on. I concluded that as things stood all the coins were complicated, cumbersome, insecure and slow. There may we’ll be a limited number of puzzle pieces but there is an infinite number of potential puzzles. Blockchain May well have the potential to make transactions more secure but for it to work someone needs to match and significantly beat what conventional services already offer. A person is more likely to die than change banks so this is a big hurdle even for Facebook, my feeling is it’s either a leap of faith, an insight of pure genius or a wild stab in the dark.

  • Kristjan Byfield

    The lack of involvement of a single bank, even the new digital alternatives, raises serious questions over the immediate viability of this. I also don’t understand the supposed security of blockchain- if it can be built it can be hacked- it’s just a matter of time. The boom/bust legacy also has a long way to go to gain consumer confidence that they actually know what £ they are getting for their BC.
    Add to this other concerns- engagement in Facebook is dropping. I don’t know many who use Facebook as much as the did say 2-3 years ago. The younger generations already see Facebook as old fashioned and, whilst they have accounts, engage mainly on other platforms. Whilst Facebook for biz has done extremely well in the US that same success has not been seen in other countries and especially not in the UK.
    Until crypto is recognised by at least one major government as a legitimate form of currency you also face other issues with regard to meeting AML compliance, and then whether banks/lenders will accept it as tender- which appears a long way off yet.

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    HMRC AML compliance will be pretty tricky with crypto currency. I look forward to a licensing body such as NAEA issuing their members with Client Money Protection certification for crypto! And I'd rather someone other than me try to explain to a landlord why we thought it a good idea to take a deposit and/or rent in crypto ....

  • James Dearsley

    Simon, Kristjan, I would only say don't consider this an overnight shift. The move away from traditional fiat currency, all backed by banks and governments will be a generational shift.

    Trust in centralised systems is significant - though perhaps not as considerable as it once was with fraud higher than ever and way more than in the decentralised blockchain based system Kristjan - but the move to frictionless and immutable payments and records means this is likely the future of how we transact and record.

    But, and I say this very strongly, this is not something that is going to impact 100% of us immediately. This will be a gradual adoption over a number of years, running side by side with traditional systems.

    Kristjan, almost every government is investigating, even trialling in this area. Just in the UK, the BofE talk about forms of crypto and digital currency regularly. Mark Carney even came out in favour of blockchain based solutions stating that its implementation could save the UK GDP 1%. As for other blockchain based trials, the Digital Street initiative in the UK is another example of our own government trialling a future land registry.

    Again though, these are generational shifts, not immediate overnight ones. The sooner these sorts of things are on your radar, the better and hopefully why I write this column in the first place.

  • Christian Woodhouse

    I totally get and understand the comments above but there are banks such as ABN AMRO, Barclays, BNP Paribas, Citi, Commerzbank, Credit Suisse, CS Affiliates, Deutsche Bank, HSBC, Natixis, RBC, SocGen and UBS who have invested large sums of money in DLT. All of those banks are members of R3, one of the worlds largest Blockchain infrastructure businesses.

    AML & ID verification will be done once at the beginning of the onboarding process. Once verified you shouldn't need to do it again.

    Personally, I think Cryptocurrencies are going to take longer to get established but there is a very good reason to build a platform using DLT to handle real estate transactions.
    You should check out the Instant Property Network

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