Blockchain may be the hottest buzzword in finance right now. Also known as distributed ledger technology, it is the structure underlying crypto-currencies such as Bitcoin and Ether.

But the technology has much wider applications in the world of finance. Because every new trade or sale (a “block”) is recorded throughout a network of computers (creating a “chain” of such blocks), it can authenticate and track transactions in real time.

Jon Haahr, founder and senior managing principal of Silver Portal Capital, explains that using blockchain technology in a trading platform can “reduce substantially the time of settlement.”

Haahr argues blockchain-based trading platforms offer “more transparency and will be able to reduce costs.” To that end, San Diego–based Silver Portal Capital has partnered with Fundamental Interactions Inc. to launch Silver Portal Markets, a blockchain-based trading platform that will create a marketplace for illiquid real estate securities. The secondary marketplace will allow trading in nontraded REITs, 1031 Exchange Delaware statutory trusts and limited partnership interests in strategic joint ventures, and it will use the Delaware Board of Trade for order matching and regulatory trade reporting.

Haahr explains, “While a work in process, SPM will be a web-based market, providing both real-time secondary trading and direct issuance. The platform will disintermediate the current inefficient system to create a competitive trading marketplace. Importantly, SPM will use Ethereum smart contracts to provide real-time reconciliation and settlement of trades, thereby greatly reducing time and cost, establishing a truly peer-to-peer market for real estate liquidity.”

Silver Portal is betting that blockchain is more than a trend — it is the next link in the evolution of financial technology.

Loretta Clodfelter (l.clodfelter@irei.com) is editor of Institutional Real Estate
Americas.