Are Real Estate Transactions Based In Cryptocurrency And Recorded On Blockchain, The Wave Of The Future In New York State And Elsewhere Around The United States?
Dateline California, July 23, 2018:
Propy Announces the First California Property Sale on the Blockchain
Leading Blockchain-powered Real Estate Platform Completes Historic Property Deal in California, in Cryptocurrency
PALO ALTO, California (July 23, 2018): Propy, a global real estate store with a decentralized title registry, today announced the execution of the first comprehensive blockchain-recorded property deal in California. The Bitcoin-to-Bitcoin sale of 10 acres of land in Southern California was processed through Propy’s Transaction Platform. Every step of the conveyance was executed via Ethereum smart contracts, marking this as the first fully-recorded blockchain transaction in California.
First, What About Cryptocurrency Price Volatility?
While drastic moves in the price of cryptocurrency may be the least of the issues concerning technology-based real estate transactions, for one side or the other in a transaction it nevertheless may be one anyway.
Given the historic volatility in the price of cryptocurrency like Bitcoin, a real issue facing buyers and sellers in a crypto-crypto transaction is crypto-price risk.
While the volatility in this arena has somewhat diminished since the Bitcoin run to $20,000, decline to $6,000 and jump to $8,000 and change, a look at the chart at the top of this article shows the inherent price risk facing a transactions participants. Over the past two days Bitcoin has dropped from over $8,000 to $7,600.
And while in some countries currency risk is real, the only risk facing those who accept U.S. currency is inflation risk, tame for some time.
New York Real Estate, Blockchain and Cryptocurrency
In December 2017 the Hallmark Abstract Service blog opined the following: ‘Can Blockchain Technology Ultimately Eradicate The Need For Title Insurance In New York State?‘
The question was asked, ‘At some point in the future will blockchain eradicate the need for title insurance in New York State, as this revolutionary technology will theoretically maintain a 100% accurate chain of title for any property?
…From the standpoint of title insurance, anyone who has ever visited the real estate records archive in the various jurisdictions across New York State will likely tell you that an often non-computerized decentralized record-keeping system and a paper-based trail would make it extremely difficult to implement an historical blockchain.
But that said, would it possible to take the title analysis compiled on a property by property basis going forward to create a blockchain of ownership?
The caveat is that this would of course assume that any title analysis done and then put onto a blockchain was 100% correct and that no defects to the chain of title were missed (i.e. the title report is only as good as the title company creating the report).
Additionally any analysis would likely only be done as a real property was changing hands, meaning that a truly valuable blockchain would be decades in the making.
That is of course unless jurisdictions around New York State, many already cash-strapped, took a real property blockchain upon themselves to create. Unlikely!
Theoretically a property title blockchain would reduce actuarial risk, in-turn reducing the premiums needed to be charged by title insurance underwriters as claims would be rare. Records kept on the blockchain would also reduce the headcount needed by title companies as the work required would be lessened due to information being reliable and readily available.
Conclusion: While reliable real property records on blockchain would prove useful for any number of reasons, a viable commercial use of the technology for the real estate industry in New York appears to be years off.’
Additionally, in a transaction how would document recording, tax payments, mortgages, etc. in New York State be handled?
If you have any thoughts let me know at the contact information below.
Mike Haltman, President
Hallmark Abstract Service
(516) 741-4723, (646) 741-6101, firstname.lastname@example.org