24 Feb 2017
In the same way that the internet makes it quick and easy to transfer information in the form of words and images, blockchain platforms allow for the quick and easy transfer of money and assets. This means that utilising blockchain technology when making real estate transactions can offer real advantages.
In addition to speeding up and simplifying the process of buying and selling a property, other advantages include:
Paying multiple parties, waiting for and depending on them causes much frustration with property transactions. Currently these are necessary because they hold information that others cannot access, or they have skills or licenses that are needed in the market. Blockchain platforms such as Bitcoin, Ethereum and others cut out these intermediaries by providing a distributed database in which anyone can record information without needing permission and without it being censored, which anyone can access.
“Before email, you needed enveloped, stamps, trucks, sorting facilities and postal workers to organise and distribute the mail if you wanted to send a letter. Once people can easily verify property records themselves and transfer a title digitally, brokers, escrow companies, title insurance companies, county recorders and notaries public will go the way of the post office.”
Real-estate fraud can be accomplished by forging paper documents such as driving licenses, bank statements or deeds. Blockchain platforms offer 100% incorruptible resources, whereby the sender and recipient of funds is logged, and where ‘digital ownership certificates’ for properties are saved, thus rendering forged ownership documents and false listings almost impossible.
Unlike the dollar or euro, which require humans and banks, blockchain currencies are not paper that is later represented by software; they are entirely electronic from the outset. This means that not only do they enable transactions to be made more easily and much more safely, they can make issues around the returning of security deposits (the likes of which frequently end up in small claims courts) a thing of the past.
Blockchain platforms have the ability to perform ‘smart contracts’. The goal of a smart contract is to reduce the need for humans to process and verify an agreement. A software protocol automates and self-executes an action when certain conditions are met. Read the full article (in the attached Land Journal) to see an example of how a smart contract could be used in a property transaction.
Wall Street is already taking advantage of the advantages blockchain technologies bring; it is time for the real-estate sector to wake up to the cost savings, efficiencies, fraud reductions and conveniences of the technology.
This article was written by Ragnar Lifthrasir, Founder and President of the International Blockchain Real Estate Association.
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