You have probably heard about how blockchain technology enabled the birth of cryptocurrency in the form of Bitcoin in 2009. What you may not know, though, is that the system applies to numerous other scenarios than finance. Yes, really—check out a few ICO lists to see the variety of brands and purposes. If you’ve been wondering about what this buzzword means but have not educated yourself already, now is the time to learn—because blockchain is revolutionizing the real estate landscape. The technology is not mainstream yet, but it will be one day, so hopeful homeowners should begin paying attention.
What is blockchain?
Blockchain is a public ledger that records all transactions made over its system. It stores data in a linear procession of “blocks” and renders them immutable, so no one can go back in and change it. This process enables a profound level of transparency because it’s visible to all parties involved: if you were to make an exchange with someone, both of you could see your payment history—forever—and neither of you could adjust it in retrospect (you can make a new transaction, but you’re both safe from tampering).
The ledger is also a decentralized peer-to-peer network, so it does not store information in one place. Traditional centralized servers are particularly vulnerable to cyber attacks because hackers have a better idea about where to target data. Servers are also susceptible to accidents and natural disasters that can destroy the physical machines and all of their data with them. However, blockchainemployes a network of computers called “nodes,” so if a hacker or disaster goes for one machine, the data is still safe elsewhere.
How blockchain can improve real estate
The real estate industry is rife with mismanagement and fraud. Sometimes scammers will try to take advantage of people, and other times there is an extreme amount of paperwork that does not flow properly between relevant parties. Transactors also typically rely on title or escrow companies to hold them both accountable, which takes time and extra money.
Due to blockchain’s transparent and public nature, it essentially eliminates the need for intermediaries. Why use a third-party verifier when you and whoever you are buying or selling a house to have a permanent record of payment? The system dramatically decreases the likelihood of fraud and oversight.
Besides cryptocurrency, blockchain can also host “smart contracts.” These contracts are computer codes that can automate agreements between transactors. If you buy a house from someone, you can store an unalterable version of your deal on the network, which can automatically release payments according to your terms.
Maintaining better records
The technology is not only useful for making exchanges; it’s suitable for maintaining accurate and unchangeable records. When builders construct a new house, they also record details regarding the survey, plat, GPS coordinates, subdivision, and more. The builder makes a note of permits and sales records every time someone assumes ownership of the property—along with warranties, certificates, improvements, etc. This is a lot of information, which means data and paperwork can be lost to mismanagement or time.
Nathan Wosnack from the company Ubitquity says that if all of this information was stored on a blockchain application:
“We would know when the old owner put in the pool or erected that fence in that which encroached over the property line. We can easily go back to every major event in that property’s history and truly inform the next buyer. Being able to better determine true market value while marketing it for sale and adding a significant amount to the transaction.”
This process is revolutionary for impoverished countries that do not currently maintain or have access to land or property titles. If you were to purchase a house via blockchain, you could know everything about it and have unalterable, real-time proof.
Can you buy a house with crypto?
If you do not hold any bitcoin, that’s okay (though there are instances of people using bitcoin to buy property, such as land in North Lake Tahoe and a family home in Austin, Texas). Purchasing or selling a house over blockchain is not commonplace yet, but companies are making it a reality. An organization known as BuyTheWhale, …