Would you like to buy a property with less interactions with your efficient, effective solicitor?
Well I cannot promise to make your next property transaction painless, much as I would like to…but I can tell you how Blockchain may help with the process in the future.
What is Block chain?
A permission less distributed database based on the bitcoin protocol that maintains a continuously growing list of data records hardened against tampering and revision – from wikipedia
Any the wiser…no, neither was I. After research and investigation, here is my explanation of Blockchain.
It is a public ledger of transactions, mainly for transactions on bitcoin at present. Back to my property transaction. This could be a public ledger of property transactions, much like what we have now with the Land registry, however the ledger is not only held by one organisation or institution. It is a public record, held by many different organisations.
Today – ownership of rights is registered by third parties: Banks, Land Registry, etc.
If you want to change ownership, you need to contact the trusted third party, follow the right procedures and the trusted third party will transfer ownership, as shown in the process images below.
This next graphic shows the differences between our current database world and the Blockchain world.
The secure database with a third party who holds all information for a particular set of transactions vs the public registry where many versions of the register exist to promote security and sharing.
How can Blockchain be secure?
With Blockchain, the knowledge of ownership is shared with everybody. Everybody has their ‘personal’ register of who owns what. On a regular basis, all ‘personal’ registers are compared to correct errors and ensure agreement about the ‘truth’.
When there is a transaction, both the buyer and the seller broadcast the transaction and everybody has to update his ‘personal’ register, after checking if the transaction is broadcast according to the agreed procedures. The last step is for all ‘personal’ registers to be mutually compared again. When there is disagreement about the content, the most common register is accepted as being the ‘truth’.
The manipulation, errors or failure of an individual register have no impact. This register will be ignored by the community – the corrupted register has to accept the ‘opinion’ of the majority, or will be expelled.
Each transaction is time stamped and each block or transaction contains a prior time stamp forming a chain linking to the next transition, making it tamper proof as each additional time stamp reinforces the next one.
Falling Piano Scenario
If 20 people witnessed a piano falling from a high-rise to the street below. All 20 people will have the same account of what happened. If one person stated that it was not a piano or it didn’t fall, would they be believed?
Sharing of records and transactions is how Blockchain works. It is tamper proof as it would take huge effort to change the story or transaction as all people are linked by the story. Not impossible, like it’s not impossible to rob a bank!
What does the future hold and how will it change. Block chain is considered a:
- Disruptive technology for the future
- If it improves the efficiency and speed of property transactions among other areas it has to be worth considering
- Wide variety of companies and governments are exploring how they can benefit from this new way of transacting
- Property records, which are incomplete, easily corrupted (intentionally or unintentionally)
- One interesting application is to use Blockchain to maintain property records in many countries where these records are often incomplete and are easily corrupted (intentionally or unintentionally)
What set of transactions or records would you use Blockchain for?
Image credit: blockchain.com