Bitcoin…. Ethereum…. Blockchain….. If you have been paying attention to financial news over the last six months there’s no way to escape it. Are cyrptocurrencies wishful thinking or is blockchain technology the future of finance? Many of us over the last year have watched the wild roller coaster ride that is bitcoin. From a starting price of around $1,000 in January of last year up to its peak of almost $20,000 in December to it’s dramatic drop of nearly 50% of it’s value in January of this year, the volatility of owning the cyrptocurrecy has it’s owners going from popping champagne to end 2017 to reaching for their antacids shortly after. But let’s take a step back for a moment. Bitcoin is just one of many new cryptocurrencies that is using the underlying technology that is the blockchain. SO NEW that spellchecker is underlining the words cryptocurrency and blockchain as I write this blog post! While I’m a bit skeptical of Bitcoin because it’s not physically backed by any sort of asset, I am excited about blockchain technology. So what is Blockchain?
In the most simple terms (from Wikipedia) blockchain is a continuously growing list of records, called blocks, which are linked and secured using cryptography. Each block typically contains a cryptographic hash of the previous block or a timestamp and transaction data. By design, a blockchain is inherently resistant to modification of the data. It is “an open, distributed ledger that can record transactions between two parties efficiently and in a verifiable and permanent way”
In real estate terms think of this as the chain of title of a property. Each block representing an owner of the property. Each time the property is transferred a new block is created. Anyone can now look back at the blockchain and see the timestamped copy of when the property changed hands and at what cost thus giving a value to that chain. Which brings me back to bitcoin. Personally I’m uneasy about it because their blockchain is not backed by any phystical asset. Just demand for people wanting the “limited supply” of bitcoins. A sort of virtual gold if you may. I am more interested in how this can be applied to real estate. Can an actual tangible piece of property like your home be turned in to a digital cryptocurrency? That is what a new company is trying to do with something they call Property Coin. Below is a link to an article from DSNews as well as a video from their co-founders explaining it all.
I am by no means endorsing this cryptocurrency as an investment. Just as an example of an article I came across. Highlighting the fact that change in coming to the industry whether we like it or not. They have created a cryptocurrency that is backed by actual real estate. Essentially you buy a property coin for it’s current value and that gives you fractional ownership of their property portfolio. They claim that 100% of of the money raised from their ICO (Initial Coin Offering) will be used to invest in properties and loans identified by our proprietary software and our experienced team. It’s a way for people to get in to real estate investment without having to buy an flip an actual house themselves.
Again, I am not endorsing this investment, I am just using it as an example of one of the many possible applications of blockchain technology in the real estate field. Like any new technology, the road to the final destination will be winding. I guess we will have to just have to wait it see where the technology takes us.
Remember, at Fidelity Land Title Agency, we’re always here to answer your questions. If you would like to discuss more feel free to reach out to me.
– David Kennedy