Currency backed by banks isn’t the only way to pay for goods and services. Bitcoin is a thriving form of money that thousands of merchants have embraced and now accept for payment. In Miami, a seller listed his penthouse for 33 Bitcoin and refused to take cash, likely to save on paying taxes to the IRS in a quest to utilize Blockchain investing. It thrives on Blockchain, which is essentially the operating system for Bitcoin in the same manner Android or iOS is for smartphones.
Goldman-Sachs dabbled into the technology in 2016 and found that the title insurance industry could save anywhere from $2 billion to $4 billion every year by looking into Blockchain development. In other blockchain news, the state of Vermont is currently testing out the idea of using Blockchain for title documents, while Sweden’s government jumped on the bandwagon and began using it to register property and land.
Sweden’s land-ownership authority, Lantmateriet, stated titles for real estate are already on a paperless system and utilize digital technology. Even with the digital system, it can take months before a system registers a sale after the contract is signed. Blockchain could turn the months into hours.
The question that arises is how the concept could benefit the real estate industry in the United States. It could aid in transactions for both residential and commercial real estate. The registration being tested in Sweden and Vermont creates a start for the idea to grow and expand while identifying potential problems or bugs. Blockchain could theoretically apply to any aspect of real estate that requires ledgers.
The president of the American Land Title Association or ALTA, Steven Day, raised concerns about the idea because the title requires more than just recording documents effectively. Other factors impacting the title of the property include mortgages, leases, easements, descriptions, and covenants which complicate the process. The changes typically require multiple documents that impact the title, and the primary document isn’t always accurate as a result.
The digital ledger also can’t detect forgery or defects in a foreclosure that can make the title unmarketable. The overall consensus is that Blockchain technology has potential to revolutionize the industry and make it more productive, but it isn’t a revolutionary answer to offer the protection a title insurance policy provides to a home buyer. It will take time to determine if Blockchain is secure enough for real estate and if it can cut costs for the multiple transactions required in completing a sale, particularly with the blockchain training needed for professionals.