My team and I had an excellent experience at the International Blockchain Congress last week and came home with a whirlwind of knowledge. I was so happy to see my brief overview was so well received by the ActiveRain community and it looks like a lot of people are interested in how this technology will work out for our industry. There’s a lot of new concepts to grasp when it comes to this technology so here’s a basic overview to help you get started.
What is Blockchain? Is it the same as the Bitcoins I keep hearing so much about?
These are different. Bitcoin is a type of cryptocurrency that uses blockchain technology to complete transactions.
Wait, what kind of currency?
Think of it this way: right now if you want to buy something you can you can either pay with physical bills and coins like dollars or euros or you can swipe your credit card and transfer the money without ever physically having to see it. The bills and coins are great because it’s a 1-to-1 exchange and doesn’t have to involve a bank, but it’s clunky and you have to cart around your money or somehow get it to the other person. Cards are nice because they eliminate the objects, but you lose the anonymity of cash because you have to involve banks and credit card companies.
Cryptocurrencies allow people to transfer money digitally (so no hauling around a wheelbarrow full of cash) and anonymously (no banking or governmental involvement). Of the cryptocurrencies in existence now, and there are many, Bitcoin is the most popular.
Got it. Now what’s blockchain?
Blockchain is the technology that makes this system work. In really rough terms, blockchain is a public distributed database holding encrypted ledgers. The blockchain holds all records of any transaction ever conducted through it and every person has a copy of it.
Hold on. You want to give everyone access to this? Isn’t that a security nightmare?
Actually, it’s the opposite. Because of the peer-to-peer design of a blockchain no one person is in control, so it makes it very difficult to hack. Everything needs to be verified by someone outside the transaction, called “miners”, so even if you hacked my computer and changed my ledger, it wouldn’t change it for anyone else’s ledger and the transaction would be marked fraudulent and denied.
Ok, but how does it protect privacy? Instead of my bank seeing my transaction now a miner does?
Not exactly. Everything in this system is encrypted. So while your bank would know that you transferred $10,000 to John Smith, a miner would just see that a16d9dg529 transferred 1.14 Bitcoins to j89i5kp983 without ever knowing who was actually involved.
Sounds good. I’m understanding it a little better. Now how does this involve real estate?
There are a lot of ways this technology could impact the real estate industry. Having a secure, anonymous, non-hackable way to transfer information on a large scale would help our industry out immensely from the financing of real estate purchases to the information sharing required for closings.
The possibilities are already being explored. Cook County, Illinois is the nation’s largest test of this. In September 2016, the Office of the Cook County Recorder of Deeds began using the Bitcoin blockchain for transferring and tracking property titles and other public records. The full report along with findings is available here.
In terms of using cryptocurrencies in real estate, that’s something that is also being explored. As of the writing of this article, Zillow has 136 listed properties that are accepting payment in the form of Bitcoin.
This is all very interesting. Where do I go from here?
This technology is just beginning to take ahold, but there’s every indication that it’s here to stay. My company, RealtyHive, has a team working to develop the best way to harness this new technology for consumers, as well as our agent partners.
I’d love for you to stay up-to-date on our findings. The RealtyHive blog has a “Tips for Agents” section that will keep you in the loop with the latest news on technology, digital marketing, and more. Subscribe to receive the latest news here.