The concept and potential disruptive nature of blockchain technology (and cryptocurrency) has been discussed at the Hallmark Abstract Service blog in the past (See- The Building Blocks of Title Insurance – Will Blockchain Disrupt The Industry?)!
But now, a real estate deal was transacted and the documents recorded utilizing Ethereum, completely bypassing this city’s own legacy recording system!
Cryptocurrency: First U.S. Real Estate Deed Recorded Using Ethereum by Liz Dominguez
Cryptocurrency is making headlines again—this time, in real estate. A pilot program in South Burlington, Vt.—initiated by global blockchain real estate marketplace Propy Inc.—marks the first U.S. deed recorded using only blockchain technology, according to multiple sources. In this case, Ethereum was used to transact and record contracts and documents instead of using the city’s recording system.
“The announcement of a pilot project to utilize blockchain technology in real estate transactions is emblematic of Vermont’s long history of innovating business, insurance and financial technology,” said Vermont Agency of Commerce and Community Development Secretary Michael Schirling in a statement. “We are fortunate to have a cutting-edge statutory framework that enables the use of blockchain technology, and we will continue to work with the legislature to ensure Vermont remains at the forefront of these innovations.”
The pilot program was announced in January in partnership with the City Clerk’s Office of South Burlington. City representatives say Vermont’s legislation lends flexibility to blockchain use in real estate transactions.
“The Propy pilot will showcase the savings of blockchain distributed technology, furthering Vermont’s and the City of South Burlington’s goal to achieve more cost-effective government,” said Natalia Karayaneva, CEO of Propy, in a statement. “In parallel to making land record management systems significantly more efficient, Propy’s additional safeguards ensure additional data integrity.”
If these blockchain pilot programs prove successful, brokerages may be more willing to transact using cryptocurrency. RE/MAX Action First in Tampa predicts that the technology is set to disrupt the industry and is prepared to embrace the use of cryptocurrency in real estate, stating transactions could be settled in minutes instead of multiple days or weeks. The brokerage is one of the first in Tampa Bay to accept and use cryptocurrency in real estate transactions.
“The most mysterious thing about Bitcoin and other cryptocurrencies is why they aren’t used more,” said Kenny Hayslett, president of RE/MAX Action First in Tampa, in a statement. “It is simply digital money—a medium of exchange that uses cryptography to safely and securely transfer assets.”
In Sweden, the mapping and land registration authority is moving forward with blockchain technology, using cryptocurrencies to conduct property sales. It expects to complete the first transaction in the next few months, according to the Wall Street Journal. The practice becoming more commonplace overseas may signal to widespread use in U.S. real estate transactions in the near future; however, with volatility and security still at the forefront as major challenges, blockchain needs to make strides to bridge the gap and assuage consumers’ fraud-based fears. Related startups
are now emerging. The latest, according to Forbes—Messari—is based out of New York and vows to increase financial disclosures for cryptocurrencies. It is still in the early stages of seed funding before its product launch, but may be the solution to creating a public database for cryptocurrency data, helping investors to determine whether a blockchain-based transaction is safe or vulnerable.
Hayslett believes that these blockchain-based transactions could help eliminate fees, and, therefore, any unnecessary delays, but understands that security is the predominant concern; however, RE/MAX Action First says the industry should be more worried about wire transfers, a process that has been vulnerable to fraud in recent years.
“Real estate itself can be a tricky investment,” Hayslett said. “The clear advantage of using cryptocurrency throughout the exchange is that it can increase in value and reap great rewards for the seller.”