How will bitcoin change the world of real-estate?
In 1984 I ran around town with thick folder of papers under my arm, pens and pencils in my briefcase, a brick of a ‘cell phone’ in my black, vinyl ‘phone bag’, sending faxes and paper letters… it was the time when processing paperwork for a real-estate deal took ages. Meanwhile, a few geeks sat in their dark basements, faces blue from their computer screens, eating donuts, drinking cola, playing video games, and from that basement the internet was born. At some point this technology surfaced to the pavements of our streets, but early on none of us knew what we were in for, and how dramatically this thing called the ‘internet’ would change the world, and my profession.
Now we send contracts for digital signatures; my office meetings are online conferences; half of my team lives on the other side of the world; we are nearly 90% paperless (good for the planet!) with 3D walks my clients can ‘visit’ our listings without leaving their respective bedrooms – and all this dramatic change happened in a very short time as the internet seamlessly integrated into our everyday reality. Ask my daughter how crucially important it is to stay connected, and how the world ends if our wi-fi service is disconnected for just a few minutes!
Looking back, if I was shown our today’s world in 1984 when I entered the world of real-estate, I would have taken it for a very wild sci-fi and certainly wouldn’t believe such a thing could possibly happen.
Now, it seems, we are precisely in the same situation, again without many people even noticing something is coming up – but it is clear that very very soon we will experience yet another dramatic change in our lives and real-estate business, this time with the blockchain technology.
Blockchain is best known for its first major application, the digital currency called Bitcoin, but the technology is much much larger than that.
The idea of blockchain is brilliantly simple – instead of storing crucial information on a private server, hidden behind firewalls and passwords, with one authority responsible for its accuracy, we can share information in encrypted public ledgers (chains), verified by hundreds of computers, so attack on one computer can’t destroy the information or penetrate the system and sneak in false information, as such an attempt would be automatically rejected by other computers on guard. No overseeing authority is needed, and the information stored in the blockchain is nearly indestructible. Anyone can, at any time, verify a certain record is valid, and a sequence of events is time-stamped with bulletproof accuracy.
I am no technology expert (I do love using pencil and paper for note taking) but I am curious and enthusiastic. In my profession I see many applications for this way of recording and storing data, and for fraud prevention: for example recording of deeds and titles. Everyone will become his/her own title company, as they will be able to verify ownership of any real-estate in the blockchain in seconds, and for free. (Cook County is one of the first adopters, and already has a pilot program to use this technology, read more here).
I assume the same will happen with liens, mortgages, auction bidding and many other areas of this industry where pieces of information need to be securely stored, time-stamped, and its accuracy needs to be verified and trusted.
Today I read an interesting article about how blockchain can change the world of marketing and advertising. And the ideas just start coming!
I am a strong believer in the unavoidable spread of the blockchain technology, but as for Bitcoin, its current beacon, the future is extremely hard to predict. It is quite possible some other digital currency will prevail (so far there are more than 200 digital currencies, and the number is growing every day). Yet it is somehow obvious that cryptocurrencies are here to stay. Unless some major intervention by governments happens that would interfere with the free market, the blockchain technology is so much superior to any other currently used, and will prevail.
Due to its price volatility and current liquidity issues I see Bitcoin more as ‘digital gold’ than a proper currency; too early to say; but we can read in the news that people are already willing to buy and sell their homes for crypto. Risky for some, smart for others, totally exciting for me.
If you purchased your bitcoin in 2013, your $13,000 investment can buy you a million dollar home today… The two pizzas that Laszlo Hanyecz famously bought in May 2010 for 10,000 bitcoins in the first real-world bitcoin transaction, would translate into $78M today. One estate or many pretty houses!
I am very excited to see what the future has in store for us. For now, I will end my blog with a little advice – take some spare change (NOT all your savings!), and buy some bitcoin or satoshi, it is still early enough to benefit from the early adoption. You will thank me later.
And, if you intend to buy or sell real-estate for crypto, contact me, I will be happy to get involved!