Blockchain Enabled Co-Housing

By Matthew Lohry and Bill Bodell | September 2015

1. Introduction………………………………………………………………………….2
2. Overview of Co-Housing………………………………………………………3
3. Co-Housing Challenges ……………………………………………………….4
4. Overview of Blockchain………………………………………………………..5
5. Blockchain Solutions…………………………………………………………….6
6. Blockchain and Design Tools………………………………………………..8
7. Co-housing and the Internet of Things…………………………………9
8. Autonomous Social Housing…………………………………………………10
9. Project Development Outline………………………………………………..11
10. Support and Advisors…………………………………………………………..14

Hypothesis:

A) Blockchain can be leveraged as a tool to help co-housing compete with market-driven forms of real estate development by reducing personal risk, increasing transparency, managing inefficiencies, and side-stepping centralized financing systems. A mass proliferation of more equitable forms of housing could result.

B) Blockchain can be integrated with other design software to handle collective decision making in new ways. Building Information Modeling (BIM) and parametric design tools could open new design-oriented uses of blockchain data. This could fundamentally change the relationships between designers, users and clients.

c) Blockchain management tools can ‘horizontally integrate’ design, construction and occupancy. When the building is complete, the blockchain can remain as the building’s data infrastructure to track environmental performance, logistics, and maintenance. For example, it can conduct IoT transactions in a safe, decentralized manner that does not rely on a private data center or private entity like Google, Amazon or Facebook.

1. Introduction

1.a Why is Co-Housing Important?

Co-Housing is a form of social housing where people share spatial and financial resources to make their livelihoods more affordable and community-oriented. By promoting density and shared property ownership, co-housing can also be more environmentally sustainable than other forms of commodity housing.

1.b The Global Crisis of Affordable Housing

Co-housing is an alternative within a context of a global crisis in affordable housing that has been growing over the past forty years. Neoliberal privatization has overwhelmingly turned urban space into real estate commodity. The result has been an exponential increase in property rent, which creates economic exclusion. This means an increasing number of people cannot access affordable urban life.

1.c What Can the Blockchain Offer Co-Housing?
The blockchain can help manage financial, legal, and creative processes that in many contexts would make co-housing impossible. By limiting interference, corruption, mismanagement, and human error, the blockchain can execute major tasks that could increase large scale adoption of co-housing through:
Unique crowdfunding systems
Collaborative design voting systems
Quantifying reputation value
Managing shared property transactions
Custom payment systems
Dispute resolution tools
Land title registries
Secure lending mechanisms
Transparency & fraud prevention

*these will be explained later in the document

2. Overview of Co-Housing

2.a How has Co-Housing evolved?
Co-housing has a long history as a housing model across many countries and cultures around the world. The common tendency is that groups of people make a value commitment that translates to shared physical subsistence in a place. In this sense, many pre-industrial housing models are de facto examples of co-housing, though not defined as such. Modern co-housing developed parallel to industrial labor organization and are predominantly urban. While the modern legacy of co-housing derives in part from the ethos of Parisian communes, it has since made a substantial transformation into the mainstream as a collectively funded community-based living alternative; especially in Europe.
2.b Baugruppen Co-housing

Baugruppen, or ‘building group’, is a special kind of co-housing model that has become common in Germany and Austria over the past two decades. Baugruppen projects have been increasing, especially in Berlin. The R50 Baugruppen in the Kreuzberg neighborhood is one recent example. These projects rely on collaborative group decision-making in the design and construction process.

Baugruppen development cuts out real estate developers; keeping costs down while promoting creative freedom between designers and residents. This marks a slight difference from other kinds of co-housing, which can also include developer-led models. Baugruppen models in Berlin have saved apartment owners 15–25% on average. That equates to $40,000, depending on the price per sq foot. In addition to the cost saving, Baugruppen residents often cite spatial luxuries that come as a result of more direct collaboration with architects. These include design features like spacious floor plans, balconies, gardens, high ceilings, flexible event space, shared transportation, community playground and passive housing components like solar grids, rain collection systems and efficient building materials.

3. Co-housing Challenges

3.a What forces restrict co-housing?

Co-housing relies on substantial group commitment and decision making by consensus. Cultural identity and like-mindedness have a very large influence on the success of these collective design communities. Therefore, in certain contexts, co-housing could become an exclusionary form of housing for privileged groups of people who can access the time, tools and resources.

3.b Managing subjectivities

Everyone — even the most likeminded people — have different ideas about what kind of home they want to live in. Different ideas of domestic space range from the placement of furniture to more complex choices like the composition of floorplans, shared spaces, use of building materials, type of appliances, and landscaping.
3.c High risk of personal investment

People are naturally wary to invest their personal money into a project whose development is not completely under their individual control. When there is no developer, co-housing owners are responsible for delays, change orders, and other costs associated with the project.
3.d Racial and cultural factors

Anecdotally, many attribute the success of Baugruppen co-housing in Germany to the relative cultural homogeneity of the country’s population. By contrast, the United States has a more diverse demographic and cultural identity based on single family home ownership. The legacy of suburban home ownership that prevails as a common form of housing development is connected to participation in middle class identity, which creates a stigma against high density and shared ownership.

3.e Real Estate Competition

The most significant challenge to the viability of co-housing is the profit-driven housing market. This is because the real estate industry has created its own protocols that exclude alternative financing mechanisms. Meanwhile, the blockchain is already being adopted by some in the field of real estate to make conventional transactions faster.

3.f Group Commitment
Co-housing relies on a constituency of people that must enter into complex legal and financial agreements in order for the project to begin. This means that conventional real estate companies are better equipped to buy properties in the fast-moving housing market. Collective organizing is currently too slow of a process to compete with highly integrated processes of property capitalization.

3.g Lack of Bank Lending

Baugruppen models in Germany have succeeded largely because of local bank lenders are willing to fund projects that take on unconventional financial risk. However, this is not true for the vast majority of banks in other parts of the world. When a co-housing project is denied bank financing, the project must be self-funded, which dramatically increased the risk taken on by each participant.

3.h Time

Forms of commodity housing supported by real estate development can be built relatively quickly, on demand, and competitively priced. Co-housing usually requires more time because it intentionally averts aspects of development industry that benefit from a great deal of efficiency. With co-housing, it can take several years for a group to make a commitment, reach design consensus, find land, and follow through with construction.

4. Overview of Blockchain

4.a What is the Blockchain?

The blockchain is a decentralized ledger, originally introduced as the core technological innovation behind Bitcoin, that distributes information through a network of users with no central authority. It does this by using the computational power of thousands of individual computers, instead of a single source. In this sense, some have likened the blockchain to a ‘world computer’.

One particularly interesting development related to the blockchain is the notion of ‘smart contracts’ — uniquely encrypted protocols that execute agreements made between people and property. In essence, it’s an infrastructure that offers a new form of digital contract that is ‘trustless’ — meaning it does not rely on pre-established trust between people who have a mutual understanding of one another. In contrast to conventional forms of contractual agreement, trustless smart contracts do not need a third party (like a lawyer, clearinghouse or centralized data center) to facilitate the transaction. No single entity owns the data transferred on the blockchain, thus creating a decentralization of authority and new opportunities for privacy and transparency.

The blockchain was not made to service single industry, rather it’s intentionally generalized for adoption by virtually any field of practice. Blockchain is already finding application in financial industry, prediction markets, data storage, online gambling, car-sharing, energy metering, governments, title registries, crowdfunding, accounting, real estate and more.

4.b Brief History of Blockchain

Blockchain was originally conceived by the enigmatic individual or group known as Satoshi Nakamoto as the transaction infrastructure of Bitcoin in 2009. The cryptocurrency, released immediately following the financial crisis of 2008, gained a small following primarily among libertarians and tech geeks interested in the digital ‘mining’ process that adds transactions to the blockchain. Following the FBI’s seizure of the popular online black market Silk Road, the price of Bitcoin temporarily surged to over $1000 per Bitcoin before leveling out.

While the blockchain was first used in the context of digital currency, there have been many subsequent projects which aim to leverage the model of distributed consensus for other applications, such as domain name registration (NameCoin), crowdfunding (Swarm), and smart property (colored coins). In 2014, Vitalik Buterin presented a white paper introducing Ethereum, an evolution of blockchain technology that expands on the application of blockchain by allowing users to store entire programs on the blockchain. In August 2015 Ethereum launched Frontier, the first in a series of public releases aiming to make the new technology more accessible.

5. Blockchain Solutions

5.a Decentralization

If the goal is to create a broad-based co-housing housing alternative, then it is extremely important to identify an effective and equitable data infrastructure that can enable truly decentralized interaction between inhabitants, designers and property. The blockchain offers solutions that can be implemented in a wide range of scales and phases of a project, from design and construction to occupancy and property management.

5.b Unique Crowdfunding Systems

Pooling financial resources is fundamental to co-housing. Individuals and families need a safe and secure mechanism to which they can place large amount of their personal capital. The blockchain can keep these investments in uniquely encrypted ledgers that are transparent and safe.

5.c Collaborative Design Voting Systems

Custom designed d-apps can be the digital interface for groups to communicate their domestic preferences. A designer can post material, spatial, functional, and logistical variations that groups can vote on. These questions can range from what color should the wall be painted to whether or not there should be special garages for car-sharing.

5.d Quantifying Reputation Value

Through token-based access control the blockchain can track and, therefore, ‘quantify’ forms of value that are not necessarily monetary. For instance, one’s participation in a community task can be tracked and converted into a reputation score that can be ‘spent’ for some sort of reward, such as access to certain amenities or special status on a community social network.This can incentivize participation tasks required to make co-housing viable.

5.e Managing Shared Property Transactions
Sharing property is the key to economic and environmental sustainability and one of the greatest benefits of co-housing. Let’s take a basic example. Two neighbors share a porch that gets covered in snow during the winter. The property owners decide to buy one shovel and share the task of clearing their porch. This may sound menial, until you scale it up to more substantial forms of property ownership like kitchens, cars, gardens, solar grids etc. The blockchain can help manage these transactions in a safe, transparent way.

5.f Custom Payment Systems

Who collects the funds and how? Today, this task is allocated to a third party — a trusted group member, bank, or real estate agent. The blockchain can decentralize this system so that all participants can see each financial input on a transparent ledger; akin to a real time excel document.

5.g Dispute Resolution Tools

Contract disputes can be locally managed on the blockchain through escrow functions. Arbitration services appeared very early in the Bitcoin ecosystem.

5.h Land Title Registries

Land titles play an important role in real estate transactions. These titles are usually stored with local county governments and are therefore susceptible to mismanagement and complicated bureaucracy. Honduras is already using blockchain technology to manage land title registries to combat corruption.

5.g Create Transparency, Prevent Fraud

A decentralized ledger is like an excel document that all participants can access with their personal computer at any time. Transactions are recorded in real time so that everyone can see what is happening.

6. Blockchain Integration with Design Software

One less explored area of blockchain application is integration with industry standard design software. Real-time data is already being piped into architectural modeling to analyze structural capacity, weather conditions, user experience, and costs. Blockchain can both secure this data in new ways and enable forms of collective design that have historically been difficult to quantify and represent.

6.a Blockchain + BIM

Virtually all building projects today are designed using building information modelling (BIM) software, such as Revit, which allows most aspects of design and construction, from door and window types to wall assemblies, to be represented in a dynamic CAD model. BIM is particularly popular in large teams,where a large number of collaborators, including architects, engineers, clients and consultants must coordinate their efforts in order to streamline the design process. The blockchain can provide a useful tool for managing and recording changes to the BIM model throughout the design and construction phases by using smart contracts to negotiate editing privileges and storing an immutable public record of all modifications to the model.

6.b Blockchain + Parametric Modeling

Parametric design software, such as Rhino with Grasshopper, are extremely useful to designers dealing with complex geometry or datasets. These models can embed many constraints within a single script, allowing the designer to change variables dynamically, without having to create additional models. Design iterations can be judged according to quantitative design goals.

Integration of the blockchain with these kinds of software can link group-based design choices to designers who evaluate, manage and execute them according to many other building constraints. Over time, the blockchain would store an immutable record of all variations of the input parameters, design goals, and script.

7. Blockchain Co-housing and the Internet of Things
7.a Post-Occupancy Performance Monitoring

While BIM has primarily been used thus far as a design tool, such detailed computer models can also be very useful for post-occupancy evaluation of building performance. Modern buildings generate a great deal of data, from energy usage to property rights, which can be incorporated into a BIM model and monitored throughout their lifespan. The blockchain is more efficient for storing and updating large amounts of data than centralized servers. It is also a much more transparent system, which could be easily audited by building occupants, owners, public entities and accreditation organizations that would otherwise be controlled by profit oriented companies, like Samsung or Amazon.

7.b Smart Property

The blockchain can execute a wide variety of smart contracts associated with internet-connected property, often referred to as the Internet of Things. This means that blockchain integration with co-housing can go far beyond collaborative design of the building floor plans, structural components, and comfort amenities. Smart property transactions can mitigate the shared use of appliances, tools and transportation.

7.c The Sharing Economy

The Sharing Economy has lately been touted as a highly disruptive business model based on the activation and monetization of underutilized resources. The basic premise is that property ownership is no longer necessary if users have easy access to shared resources such as cars, apartments, and tools. Successful businesses that have taken advantage of the sharing economy model include Uber, Lyft, and Airbnb, which have undercut the incumbent taxi and hotel industries by providing a platform for users to share their cars and homes. With the introduction of smart property and the Internet of Things, it is now possible to program connected objects, such as door locks and car keys, to grant conditional access only to users who have been given permission via a smart contract. What’s more, the blockchain can serve as a decentralized platform for services to cut out the middlemen (i.e. Uber and Airbnb), making the sharing economy truly peer-to-peer.

8. Autonomous Social Housing

8.a Decentralized Autonomous Organizations

Perhaps the most radical concept to evolve from the blockchain and smart contracts is the Decentralized Autonomous Organization (DAO). DAO’s are organizations which do not require any direct human involvement and run according to a set of incorruptible business rules written as smart contracts. Typically DAO’s will incentivize humans to perform non-computational tasks and can pay for such tasks with some form of internal capital, such as cryptocurrency or equity shares.

In the case of co-housing, the DAO would take the place of traditional landlords by managing the maintenance of building facilities and coordinating rental agreements. This could eliminate certain difficulties with co-housing, such as landlord biases, unaccountability, and unexpected changes of ownership. The logical protocol of a DAO is fully transparent open-source software that can be audited and modified by shareholders. By distributing the decision-making process across a network of shareholders (i.e. tenants), a blockchain co-housing organization amplifies community engagement while avoiding certain managerial pitfalls of typical cooperative living arrangements.

9. Project Development Outline

PHASE 1: October 5–31, 2015

Proof of Concept | R50 Baugruppen | Berlin, Germany

On October 5th I will be traveling to Berlin to develop a proof-of concept case study. I will be meeting with a constituency of architects and residents of the R50 Baugruppen, including the lead architects of the project: Tim Heide, Verena von Beckerat and Jesko Fezer.

My goal is to conduct interviews and site studies on the group design processes, construction, and post-occupancy living arrangements in order to identify how blockchain can be integrated into the process. A major focus will be the financial mechanisms that were used.

R50 Baugruppen and the Kreuzberg neighborhood in Berlin.

PHASE 2: October, 2015 — ?

Develop a beta D-App. Identify and confirm group of designers and start-ups who will participate in collaborative group design of custom out-post studios in Callicoon as a feasibility test.

PHASE 3: November 1, 2015 — September 1, 2016.

Feasibility Tests | Kay’s Property | Callicoon, New York

Kay [___] has given us special access to her underused second home which is located in Callicoon, two hours from New York City. Our relationship with Kay has grown from many years of working on creative projects in Callicoon. She supports the project.

The feasibility test will scale down fundamental aspects of co-housing group design through select studio occupancy by a handful of chosen participants. This group will use the first D-app to collaboratively manage the design and installation of new studio spaces in the property. This will include ‘soft’ renovations in addition to the installation of furniture and tech resources.

The property is ideal for three reasons:

We have already used the space to house guests working on collaborative projects and we have been receiving an increasing amount of requests to use the space for retreats and studio space. The location is perfect for those needing direct access to local ecology of the Upper Delaware, or those who can work remotely and benefit from a retreat setting.
The interior spaces are unique and varied. The original architect designed many split-level rooms that already act as semi-independent units. This is a good starting point to build out custom studio spaces alongside collaborative work environments.
Our use of the space is mutually beneficial for Kay, who wants to see the space activated and needs help with general maintenance and property development.

Kay’s property and the hamlet of Callicoon in New York.

10. Project Advisers

Project advisers will have indirect relationship to the project’s development, bringing in expertise from related fields of practice.

Coming soon