Blockchain Experts Converge on Real Estate

blockchain wave real estate

In late July, the National Association of REALTORS® hosted blockchain experts, software developers, and industry partners with the intent of combining efforts to launch effective blockchain applications in real estate. In addition to distributed ledger experts, the meeting was also attended by technology executives from large MLS’s and REALTOR® Associations, real estate attorneys, home inspectors, and representatives from local governments.

NAR’s Research and Development Lab, CRT Labs, has been leading the organization’s innovations in this space and organized the full day meeting. The day was kicked off by a presentation from a leading figure in the open-source software movement, Brian Behlendorf, who is also the project lead for the Hyperledger Project.

The group spent the day discussing the merits, value, governance, and access control of a multitude of different potential blockchain applications. The purpose of these applications ranged from improving access to public licensure information to enhancing the way REALTOR® associations exchange member information. Perhaps the most impactful application discussed was the development of a blockchain-based system that generates and tracks unique identifiers for properties in a similar way that VIN numbers identify automobiles.

The potential for impact of these applications was so great that the group has decided to move forward and dedicate development resources to multiple applications. Following the event, Behlendorf, on behalf the Hyperledger Project expressed interest in making the Property Unique Identifier application a featured case study for their organization.

Presentations

Brian Behlendorf, HyperLedger Project

Behlendorf shared the exact moment of when he realized the potential for blockchain technology. His “Ah-Ha” moment came after hearing of a land title project in Honduras that was being started to protect land ownership through decentralization of records. In recent history, the digitization of systems has led to the centralization of systems. He explained how permissioned ledgers can begin to re-decentralizing how these systems work.

Behlendorf then went on to describe the opportunity and benefits that will come from the transformation of the traditional “hub and spoke” models to ledgers, and specifically how the roles of intermediaries in those models will shift over time.

John Mirkovic, Cook County Recorders of Deeds

John Mirkovic currently serves as Deputy Recorder (Communications/IT) for the Cook County Recorder of Deeds. In that role, he serves as office spokesman and is responsible for internal and external communications, legislative advocacy, the CCRD Property Fraud Unit, and has implemented numerous technology advancements at CCRD.

Mirkovic shared his experience launching a pilot program to use blockchain to track and transfer real-estate property titles and other public records, becoming the first land recorder’s office in the country to do so.

Andrew Page, Business Analyist, Connamara Systems

Andrew Page presented on Design Patterns for Public Registries. Prior to this meeting,Page created an open source title registry application that could be integrated with local, state, or federal governments to track ownership of assets. He spoke about the advantages and disadvantages of different application architectures for the title registry.

David Conroy, CRT Labs, NAR

Dave Conroy demonstrated an application that would allow for more efficient sharing of engagement levels of REALTORS® among the three levels (National, State, and Local) of REALTOR® associations on a private and permissioned ledger.

About CRT Labs

CRT Labs is a research group operated by the National Association of REALTORS’® Center for REALTOR® Technology. The primary goal for CRT is to track emerging technologies that will affect real estate, educate its members, advocate for the proper use of technology, and innovate when there is a gap between what is needed and what is available.
In 2015, CRT established the R&D lab to investigate smart home/internet of things devices, renewable energy, urban agriculture and building materials, as well as any other emerging technologies as they become evident. CRT is working with NGOs, vendors, national laboratories, universities and government agencies to help promote NAR as an agent for technology research and innovation.

NAR’s Research into Blockchain

Blockchain Real Estate
CRT Labs was launched in August 2015 with the purpose of educating the REALTOR® membership about emerging technologies that could have a potential impact on the real estate industry. Since then, we have strongly advocated for proper security and privacy in today’s smart home, developed fantastic educational material for REALTORS®, and designed innovative and affordable solutions for monitoring indoor air quality.

Today, we are excited to be discussing blockchains, which we feel have countless applications for use in our industry. The purpose of this blog post is to give a basic explanation of what blockchains are, how they differ from traditional database models, and to provide an update on NAR’s research.

What Are Blockchains?

Blockchains are digital ledgers that are shared among a distributed network of computers and interested parties. These digital ledgers are permanent and tamper-proof because the underlying technology allows each participant on the network to interact with the ledger in a secure way without the need for a central administrator.

While that might sound complex and a bit difficult to understand, the basic idea behind blockchains is actually pretty straight forward.

Simply put, blockchains provide a verifiable, trustworthy record of events or transactions.

This digital record of events, or ledger, maintains a continuing growing list of ordered entries called blocks. Each block is linked to the next in chronological order and contains cryptographically secured information that links it to the previous block (like a chain). This allows for information to be added to the ledger in a manner that is impossible to alter retroactively.

What Are the Benefits to Blockchains?

Beyond the fact that they are tamper-proof by design, there are many other advantages to using blockchains instead of traditional databases in your applications.

Some of the key benefits:

  • Each participant retains its own copy of transactions, as ledgers are not centralized and can not be controlled or altered by a single party.
  • Blockchains allow for smart contracts, meaning the ledger itself can be programmed to trigger transactions automatically based on predefined, software-based clauses.
  • Decentralization of the data removes any single point of failure.

These benefits are often overlooked due to skepticism surrounding early blockchain applications involving digital currencies like Bitcoin. Although Bitcoin is the most successful example of a blockchain application, it is important to not equate the two.

Bitcoin uses blockchain technology, but Blockchains ≠ Bitcoin.

Why Is NAR Focusing on Blockchain Research?

Personally, I believe blockchain has the potential to be one the most impactful technologies of the next few decades.  I also predict we will begin to see more and more blockchain-based applications enter the mainstream real estate industry in next few years. After financial tech and supply chain management, the real estate market will be the target for entrepreneurs trying to disrupt traditional business models.

CRT Labs believes that smart contracts could greatly reduce the cost of doing business. The automated checks and balances these smart contracts provide will help REALTORS® and their clients get to the closing table faster and with less risk involved. We are also beginning to see the public sector getting involved. Chicago’s Cook County is testing Blockchain-Based Property Title Transfer which could help protect rights to property ownership records.

NAR’s short term goals are to create practical, open source blockchain applications that highlight the positive aspects of the technology that can also be used as case studies by our industry partners. Our first project uses blockchain to provide an improved method of sharing membership engagement levels (committee service, education history, CE Tracking) across all local, state, and national levels of the association. We are hoping that this initial work will help lay the groundwork for adoption of more high-impact projects in the future.

NAR’s Progress To Date

Since September 2015, NAR and CRT labs have:

  • met with NAR committees, advisory boards, and industry partners on over twenty occasions to discuss the potential of this new technology
  • published two white papers  ( 1, 2 )
  • released the source code for the prototype that what will soon become our membership engagement tracker.

Going Forward

Over the next  few months, I will be speaking at three conferences on this topic:

CRT Labs and NAR also plan to continue developing and sharing practical blockchain solutions.


NAR Resources

White Papers:

Projects:

Previous Posts:

External Resources

Blockchain Solutions: