Jeff Garzik, a respected developer in the Bitcoin industry and founder of Bloq, recently stated during his keynote presentation at the International Blockchain Real Estate Association Conference that the Bitcoin blockchain and real estate have a synergistic relationship.
The two key elements which Garzik introduced are the resilience of the Bitcoin blockchain network and its cryptographic integrity that enable all parties involved in the real estate industry to conduct the transfer and acquisition of properties in a decentralized manner, without the presence of mediators.
The replacement of paperwork, lawyers, and third-party agencies with decentralized records of data stored on a blockchain network reduces costs and time employed in conventional real estate property deals.
Specifically, blockchain-based real estate platforms merge many complicated processes and cases usually dealt with by real estate firms. Garzik states that four useful real estate applications of Bitcoin’s blockchain technology will disrupt the industry: digital titles, multi-signature escrow, crowdfunding, and liquidity.
Application of the Bitcoin Blockchain
The first application described by Garzik is digital titles, which are labels secured on the blockchain network for various use cases including insurance. Once a title is recorded onto a decentralized network such as the bitcoin network, the irrefutability of the distributed ledger technology eliminates the possibility of alteration and and modification, reducing cost and due diligence associated with titles and title insurance.
The second application is the multi-signature escrow system, which is enabled by the Bitcoin network’s built-in technology called the multi-signature technologies. Fundamentally, the multi-signature technology enables users of bitcoin to divide the rights of a single account to many users, essentially creating a shared bitcoin wallet.
This technology allows three parties typically involved in the settlement of a real estate deal which are the buyer, seller, and arbitrator, to create a shared account to settle the deal without having to deal with independent contractors and companies to deal with financial and regulatory disputes.
The third and fourth applications Garzik introduced at the talk are crowdfunding and liquidity, which many existing blockchain-based real estate firms including Bloq, Rex, and Ubitquity have implemented.
Bloq, Ubitquity and Rex
While Bloq has yet to demonstrate the application of their Bitcoin blockchain-based platform in the real estate industry, Garzik explained during his talk that Bloq has been collaborating with notable corporations including Deloitte, Microsoft, and IBM to provide a general platform for the real estate industry.
Bloq is currently focused on offering decentralized infrastructure for real estate firms and plans to deliver their blockchain infrastructure software platform to settle various real estate settlements including transactions and real estate data.
Ubitquity, on the other hand, established the world’s first Bitcoin blockchain-based real estate record earlier this week. Using colored coins, which are methods for representing and managing real world assets on top of the Bitcoin network, Ubitquity successfully demonstrated the potential use case of the Bitcoin blockchain network in the real estate industry.
“We currently use the Bitcoin blockchain because it is the most secure and has the most mature tools built when we started creating our platform six months ago,” Ubitquity LLC Director of Business Development Matt McKibbin told BTCMANAGER. “We use Colu’s API which is built on colored coins and has great support. It has the capacity to [use] the metadata needed for the form fields, pictures and associated property information to create an immutable record and clean title on the blockchain.”
Like Bloq, Ubitquity places its trust in the security of the Bitcoin blockchain, which makes all information and records stored its blockchain network immutable. Furthermore, the transparency of the Bitcoin blockchain network reduces search costs and title insurance costs for real estate firms, sellers, and buyers.
“Title companies, banks, and county recorders can reveal their public key in order to use their reputation for the information place on the blockchain,” said McKibbon. “If errors are found, these can be changed and the record of change will always exist, reducing fraud. Finally, as more information about the property is added, future transfer costs can be reduced by referencing the blockchain based asset.”
Utilizing this advantage of the Bitcoin blockchain network, on July 12, 2016, Ubitquity settled the first real property ownership transfer on the bitcoin blockchain with Atlantic Sotheby’s International Realty and Norfolk Virginia-based realtor, Marina Reznik.
“A lot of meticulous work goes into doing a title search and ensuring ownership transfers correctly. Any title defects revealed must be cleared up and the sale is still recorded with the appropriate municipalities governing the transaction,” said Reznik. “We have simply added an extra layer of security by securing the record of transfer on the Bitcoin blockchain for permanent immutability. This is a huge step forward for blockchain and real estate.”
Unlike Bloq and Ubitquity, Rex has developed their real estate platform on the Ethereum protocol to connect the process of buying and selling real estate properties without the involvement of centralized corporations. The startup specifically focuses on eliminating the use of inefficient multiple listing services (MLS), the current industry class of services that enables real estate brokers to establish contractual offers of compensation.