By Comparison
Mobile Phone — vs — Blockchain Consumer Development
Mobile Phone
- 1st mobile phone call placed — 1973
- Motorola releases 1st commercial phone — 1983
- First BlackBerry released — 1999
- First Apple iPhone released — 2008
Blockchain
- Bitcoin Whitepaper released — 2008
- First Bitcoin transaction — 2009
- First Bitcoin transaction made for pizza —2010
- Bitcoin exchange 1 Bitcoin = $1 — 2011
- Bitcoin exchange 1 Bitcoin = $33,151 — 6/08/21
Five years ago, it would have been nearly impossible to go a week without someone mentioning how blockchain technology was going to disrupt title insurance – some going as far as predicting that a widespread adoption of blockchain would render the entire 16 billion-dollar title industry obsolete. Title would be transferred through the blockchain, a property’s entire ownership would be memorialized in perpetuity on the blockchain. No need for title searches, due diligence, or insurance because all risk would be wiped out with one fell swoop.
Over the last five years, as blockchain technology has evolved, that conversation has matured. Bitcoin is no longer the only proven application built on a blockchain infrastructure. The NBA has begun selling digital basketball cards that only carry value because the blockchain establishes a certain level of ‘uniqueness’ to each card. A digital work of art by an artist known as Beeple has sold for over 60 million dollars because it was sold as a blockchainpowered “non-fungible token.” The value of cryptocurrencies, such as bitcoin, ethereum, and dogecoin, take top billing on all of the major finance news websites.
Ironically, the widespread application of blockchain technology into the mainstream has actually led to fewer conversations about a blockchain-induced extermination of the title insurance industry. This is likely due to the fact that, over the last five years, the theory has collided with reality, and overturning the institutional powers that exist has proven to be a bigger task than expected. As blockchain gains traction in certain niches of real estate, though, it is actually more important than ever for real estate practitioners to understand the impact blockchain will have on our industry, and how we can be knowledgeable guides for our clients amidst one of the biggest technological innovations since the Internet.
Future Developments to integrate blockchain in real estate
A house in Austin, Texas was purchased using bitcoin in 2017. As cryptocurrency continues to expand into the mainstream, there will likely be more transactions closed using digital funds.
A woman in Vermont was the first to have her deed recorded in the blockchain by a Silicon Valley startup. Although there are no municipalities that have adopted the blockchain as an official index of land records, various counties within the US and nations with national title registries (i.e. Estonia, Georgia, Brazil) have started to explore implementing blockchain to either replace or strengthen their land records.
An increasing number of companies are providing solutions to allow for fractional ownership of commercial real estate and real estate portfolios. Rather than investing in one building, investors are able to invest in a small percentage of a number of buildings, allowing for diversification of risk.
We all know that mortgage debt and servicing rights are bought and sold on the secondary market on a frequent basis. Inefficiency occurs when the same loan must be re-underwritten each time the note is bought and sold, or if a third party registration system (such as MERS) is needed to keep track of who the underlying note or who the servicing rights are owned by. These redundancies could theoretically be resolved by the adoption of a blockchain solution.
Incidences of wire fraud are rampant and are widely considered the number one problem facing the real estate industry. Could blockchain technology, which touts security and authentication to be its core benefits, be the solution for preventing wire fraud? With millions of dollars lost annually, a company that can build a bulletproof wire fraud prevention solution could add tremendous value in loss mitigation.
All in all, there is little doubt that we are only seeing the tip of the iceberg. As for a large-scale disruption of the title insurance industry, there remain significant hurdles that will need to be overcome for blockchain to have major change on the way title is searched, transferred, or recorded. We will continue to monitor further developments in title insurance, and the real estate industry as a whole.
Five companies that are leveraging blockchain to impact real estate
Imbrex – creates a decentralized real estate marketplace where buyers can connect with listing agents
Ubitquity – partnered with Brazil’s Real Estate Registry Office in a pilot program to strengthen its national title registry using blockchain technology
Managego – help landlords and tenants process rent payments and handle maintenance requests
Realblocks – lowers cost of entry and to help investors diversify risk by ‘tokenizing’ real estate assets to allow for fractional ownership or portfolios of properties
SuperWorld – an augmented reality through which users can buy and sell virtual real estate using NFT’s