Real estate on the blockchain
By now, you’ve heard of one of the most popular applications of blockchain technology: bitcoin. But bitcoin and other cryptocurrencies are only one way to use blockchains. Blockchain technology applies to any transaction and has the potential to simplify the process of buying or selling real estate.
What is blockchain?
Officially invented just a decade ago, blockchain technology is simply an online ledger that records events. A blockchain is a decentralized series of computers that records transactions, or blocks, in real time. Once recorded, a block cannot be changed – new blocks reference the previous block, forming the chain. As more transactions happen in the ledger, the chain grows.
Because blocks cannot be altered once entered into the database, a blockchain is an unchangeable historical record of transactions. Each transaction is recorded immediately and is automatically verified by consensus of the entire network.
No one controls the blockchain; once recorded and auto-verified by the network, events are permanently viewable to users of that blockchain.
How is it changing real estate?
This system could have many benefits for the real estate industry. Blockchain could make transactions more efficient by allowing buyers and sellers to send money, smart contracts and other documents instantly and securely. Each block is encrypted making the ledger essentially hack-proof, a major benefit at a time when wire fraud and other scams are growing more sophisticated by the day.
Blockchain technology could also greatly increase the speed of transactions. Since the blockchain does not rely on a centralized owner, things like payments that normally take several business days for a third party to process could be sent in minutes at a fraction of the cost.
Record-keeping is another way blockchains could improve the industry, especially for title records. The blockchain could tell interested buyers all about the property’s ownership and history quickly and with much greater transparency.
What are REALTORS® doing about it?
The National Association of REALTORS® is already thinking about how blockchain technology can improve the real estate industry and the role REALTORS® will play in implementing the technology.
NAR is monitoring state legislation and has created a Presidential Advisory Group to examine how this kind of ledger might affect the real estate transaction.
Read more about blockchain and how REALTORS® are getting involved on NAR’s website.