In the early 90’s, the Internet became accessible for commercial use. The Internet Protocol is a digital method that allows data to be sent from one computer to another and allows worldwide communication among computers in a standardized fashion. What started initially as a platform to send basic data such as email communications has grown to be the primary platform for virtually all communications, finance, entertainment and commerce. The Internet has changed the way we live and work. It’s the platform that runs smart phones, retail, finance, investing and virtually every part of our lives. It’s also set to become the platform for the next generation of devices from autonomous vehicles to the Internet of things (IOT), the interconnection via the Internet of virtually every device in our homes and workplaces. Few could argue that the Internet has not had a profound impact on many industries including the real estate industry.
Internet 3.0 Based on Blockchain Technology
But as the impact of the Internet expands into every aspect of our lives, there is a new technology emerging that in the future will make the Internet, as we know it today, seem like record keeping on three by five cards. This new technology is called the blockchain protocol. Now in its infant stages, the blockchain protocol has the potential of again dramatically changing the way we live and work. While the Internet could be considered evolutionary in changing our world, the blockchain protocol may end up being revolutionary. And its biggest impact initially is likely to be in the area of finance, investments and real estate.
So what is a blockchain and how does it work? In short, a blockchain is a new way of storing data and digital information in a secure decentralized manner. The most famous blockchain protocol is Bitcoin, the blockchain protocol that is the basis for the controversial cryptocurrency called bitcoin. In much the same way as the Internet is a decentralized communication system, a blockchain allows a database of digital information to be stored across thousands of computer systems in much the same way the Internet is a system supported by multiple computer systems around the world.
Highly Secure Encrypted Decentralized Databases
The difference is that the blockchain is visible for all to see; but the information stored on the blockchain is encrypted and cannot be duplicated or changed in any way unless it is unanimously done across the system which is impossible unless done with the consent of the parties that control the information. Unlike databases today that are stored on centralized systems that can be hacked and stolen, such as the hacks on centralize databases like Equifax, Hilton and Marriott where over 500 million records were stolen, it’s impossible to hack, change or steal information stored on a blockchain database.
Blockchain and Real Estate
So how can this new technology change an industry like real estate? At some point, all information relating to the real estate world will be verified and stored on a blockchain. Any information about a property from title records, surveys, due diligence information, ownership history, utilities and income and expense records will be verified when completed and stored on a blockchain. This will eliminate the need for a trusted third party, such as a broker, attorney or title company to later have to verify that historical information about the property is correct.
In the area of real estate transactions, the need for extended due diligence periods, title searches, surveys and attorney review will be eliminated. A buyer and seller will be able to buy and sell whole properties, or fractions thereof, within minutes in much the same way stocks and bonds are traded today. A buyer could look at a property in the morning, buy the property and move in that afternoon. In the same way that the Internet changed the way we do live, work and communicate, this new blockchain technology will usher in whole new set of technologies, applications and industries.