Blockchain technology is redefining the property market
Blockchain technology is redefining the property market.
Blockchain technology is already having a huge impact on the property industry.
If you read the news, you might think that the biggest use of blockchain tech is making people rich by buying and selling Bitcoin. But there’s another, a potentially more important way that blockchain technology will have a dramatic effect on our lives: It gives us a new way to track property ownership and transactions.
The problem with the current system of tracking property ownership
Every home is unique, but some things about buying and selling them are universal. When you buy property, you need to know who owned it previously — and whether they had the right to sell it to you. You also need to know whether they owe any outstanding debts against the property that you’ll be responsible for once you take over ownership.
You can’t just go down to the local council office, ask who owns a piece of property, and purchase it on the spot. The process is complex enough that investors in property-focused cryptocurrencies are hoping to disrupt the market by building decentralised alternatives to modern property exchanges.
The process of purchasing a property is a lengthy and often inefficient one.
The transaction process is one of the most challenging and time-consuming aspects of purchasing a property.
The process from offer to close can take weeks or even months; along the way, many people are involved in moving it forward.
When you’re ready to buy your first home, you’ll have many questions about the process. Here’s what to expect:
- If you’ve been approved for a mortgage:
- Make an offer on a house, either with your agent or directly with the seller.
- Wait for the seller to accept your offer.
- Hire a solicitor, who will review all the documents and help you arrange for a title search, which determines whether there are any liens or other claims on the property. (This typically happens before signing the sales contract as well.) Your solicitor should also review other documents related to the sale, such as surveys and inspections. They’ll also order a preliminary title report from a title company. Don’t
- You then sign a “sales contract,” which includes all of the details of your offer, including price and contingencies that must be met before closing. A deposit is generally required at this point as well (usually 5% to 10% of the sales price).
Blockchain technology could significantly reduce the time it takes to buy and sell the property by automating some of the most mundane tasks.
A blockchain network works because every participant has a copy of the same exact ledger, which records transactions in chronological order. The ledger is updated every 10 minutes and can not be changed or manipulated by anyone.
With blockchain technology, all the parties can work together on one platform to expedite the property transaction in ways we couldn’t even imagine before.
Blockchain can provide a safe record of all documented transactions, so buyers and sellers can avoid disputes over missing documents or forged signatures.
The blockchain is a digital ledger that records transactions securely and securely. The technology is often called a “trustless” system because it removes the need for a third-party verifier to confirm that two parties are doing what they say they are doing.
Blockchain can be used to create a permanent, public, transparent ledger system for compiling data on sales, tracking digital use and payments to content creators, such as wireless users or musicians. In 2017, IBM partnered with ASCAP and PRS for Music to adopt blockchain technology in music distribution. IMB’s blockchain powers the tracking of music rights and royalty distributions.
A blockchain database consists of two kinds of records: transactions and blocks. Blocks hold batches of valid transactions that are hashed and encoded into a Merkle tree. Each block includes the cryptographic hash of the prior block in the blockchain, linking the two.
The linked blocks form a chain, with each additional block reinforcing those before it. As new blocks are added to the end of the chain, older blocks are codified into immutable history — hence the term “blockchain.”
By digitising property records, blockchain creates an indisputable record that can be accessed anywhere without having to make an in-person visit to a physical office.
In a world where more and more business is being conducted online, removing the friction of buying, selling, and transferring properties makes sense. Blockchain technology is poised to do just that.
With blockchain, title companies can create a distributed ledger of all transactions. This would mean that every transaction would be recorded in a “block” of data that would be linked to the previous transaction block, creating a permanent record of each transaction. A traditional database would have one centralized or “master” copy of this information. With blockchain, that master copy is distributed among all participants in the network.
This master ledger can establish trust by providing an indisputable record of ownership within a given community. It also establishes trust by using cryptography for security, which means no participant can be hacked, and the entire system cannot be hacked.
By allowing for real-world assets to be digitised on the blockchain, there’s no need for a physical title office to provide proof of ownership or transfer ownership from one entity to another — it’s all done digitally using smart contracts.