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There's a lot to write about blockchain, bitcoins and related technologies, and for many real estate professionals, this is part of a brave, new and confusing technological world. As the original internet, blockchain is a technological revolution that will touch all people and companies. So people pay attention, but many still do not understand what blockchain is.
Imagine that you and your best friend Bob stand on a stage in an auditorium and that there are 1,000 people in the audience. In front of these 1,000 people, give the keys to your car to Bob, and Bob gives you his Rolex. State, "Bob, now you own my car."
Bob declares to you, "Now you have my Rolex." There are 1,000 witnesses who can declare, without a doubt, that your car now belongs to Bob, and the Rolex belongs to you. If someone later in the audience says a conflicting account about who owns the car or Rolex, the other 999 people will confute it. And if you take a bunch of unused keys and try to give that same car to someone else, the 1,000 members of the audience will confirm that Bob owns the car, as each of them witnessed the "transaction". This is the essence of how the blockchain works.
In its simplest sense, blockchain is a series of computers (from thousands to potentially millions) that maintain the same record of an event or transaction in a ledger open to the public. Each record is encrypted and the ledger is practically hacker-proof. Because all of these computers see the same thing, they offer consent that the event or transaction registered is valid. The most important value of the blockchain is that it allows two or more parties to interact with, for example, a financial transaction, without intermediaries.
Bitcoin
Bitcoin is simply an application of the blockchain. Buy a bitcoin with cash. Transfer ownership of the bitcoin to someone else with the consent of thousands of "witnesses" and someone else can then sell the bitcoin in exchange for cash. It is a way to transfer money without a bank or other third parties. There is no physical currency, however; it's not like a subway token. It is a digital asset, assured by the blockchain.
Interestingly, when people buy houses with bitcoins, they are still buying with money. It has just been converted into bitcoin first. So, the next time you read about a bitcoin home sale, it's usually still a traditional cash sale.
The Blockchain has many applications
What makes the blockchain universal is how it can be implemented for virtually any type of transaction, registration or agreement between one or more parties. These can include:
• Smart contracts.
• Voting and elections.
• Supply chain management.
• Intellectual rights, patents, trademarks.
• Property rights.
• Criminal documents.
• medical documentation and history.
• Personal documents and credit history.
As long as there is information that represents an agreement or a record, the blockchain can register, encrypt and protect this information for eternity.
Real Estate and The Blockchain
For real estate, the blockchain has the potential to change the way we do business. We are developing smart contracts, which will allow us to conclude real estate contracts, commitments, real estate registers (eg deeds) and funds distributed without proprietary companies or lawyers. These contracts are often compared to a vending machine concept: deposit your money and the machine issues a product without human intervention.
In the near future, it may be possible for a homebuyer to buy a home and complete the sale (along with an escrow insurance and securities) by clicking on a shopping cart on a website. The blockchain will guarantee that the buyer obtains the title or the act and the seller obtains the money (through a cryptocurrency). The blockchain will also record the title or act in appropriate public documents, such as a county in the United States or similar.
Real estate professionals will continue to thrive in the blockchain era. The advice, knowledge and possession of the hand of real estate professionals will always be an important part of the process of the buyer or seller. However, the management of money and transactions will inevitably change and the change is already under way. The brokers will have to adapt their business models to understand and enable intelligent transactions, but otherwise they will continue to thrive in the blockchain era.
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There's a lot to write about blockchain, bitcoins and related technologies, and for many real estate professionals, this is part of a brave, new and confusing technological world. As the original internet, blockchain is a technological revolution that will touch all people and companies. So people pay attention, but many still do not understand what blockchain is.
Imagine that you and your best friend Bob stand on a stage in an auditorium and that there are 1,000 people in the audience. In front of these 1,000 people, give the keys to your car to Bob, and Bob gives you his Rolex. State, "Bob, now you own my car."
Bob declares to you, "Now you have my Rolex." There are 1,000 witnesses who can declare, without a doubt, that your car now belongs to Bob, and the Rolex belongs to you. If someone later in the audience says a conflicting account about who owns the car or Rolex, the other 999 people will confute it. And if you take a bunch of unused keys and try to give that same car to someone else, the 1,000 members of the audience will confirm that Bob owns the car, as each of them witnessed the "transaction". This is the essence of how the blockchain works.
In its simplest sense, blockchain is a series of computers (from thousands to potentially millions) that maintain the same record of an event or transaction in a ledger open to the public. Each record is encrypted and the ledger is practically hacker-proof. Because all of these computers see the same thing, they offer consent that the event or transaction registered is valid. The most important value of the blockchain is that it allows two or more parties to interact with, for example, a financial transaction, without intermediaries.
Bitcoin
Bitcoin is simply an application of the blockchain. Buy a bitcoin with cash. Transfer ownership of the bitcoin to someone else with the consent of thousands of "witnesses" and someone else can then sell the bitcoin in exchange for cash. It is a way to transfer money without a bank or other third parties. There is no physical currency, however; it's not like a subway token. It is a digital asset, assured by the blockchain.
Interestingly, when people buy houses with bitcoins, they are still buying with money. It has just been converted into bitcoin first. So, the next time you read about a bitcoin home sale, it's usually still a traditional cash sale.
The Blockchain has many applications
What makes the blockchain universal is how it can be implemented for virtually any type of transaction, registration or agreement between one or more parties. These can include:
• Smart contracts.
• Voting and elections.
• Supply chain management.
• Intellectual rights, patents, trademarks.
• Property rights.
• Criminal documents.
• medical documentation and history.
• Personal documents and credit history.
As long as there is information that represents an agreement or a record, the blockchain can register, encrypt and protect this information for eternity.
Real Estate and The Blockchain
For real estate, the blockchain has the potential to change the way we do business. We are developing smart contracts, which will allow us to conclude real estate contracts, commitments, real estate registers (eg deeds) and funds distributed without proprietary companies or lawyers. These contracts are often compared to a vending machine concept: deposit your money and the machine issues a product without human intervention.
In the near future, it may be possible for a homebuyer to buy a home and complete the sale (along with an escrow insurance and securities) by clicking on a shopping cart on a website. The blockchain will guarantee that the buyer obtains the title or the act and the seller obtains the money (through a cryptocurrency). The blockchain will also record the title or act in appropriate public documents, such as a county in the United States or similar.
Real estate professionals will continue to thrive in the blockchain era. The advice, knowledge and possession of the hand of real estate professionals will always be an important part of the process of the buyer or seller. However, the management of money and transactions will inevitably change and the change is already under way. The brokers will have to adapt their business models to understand and enable intelligent transactions, but otherwise they will continue to thrive in the blockchain era.
