The governments of the world don’t have much interest in using the blockchain in the land registry and real estate markets. Will they come around? Would it provide a better solution than that provided by the government?
It is a great undertaking to integrate Bitcoin and Blockchain technologies into the real estate industry.
Our Cointelegraph correspondent talked with the president of the International Bitcoin Real Estate Association, Ragnar Lifthrasir about the potential of Blockchain technology for development in the real estate industry. His team wants to create a digital alternative for government land and title registries.
“If a buyer and a seller of a property both agree to use Bitcoin Blockchain solutions instead of government solution, nothing will stop them as long as they both agree to use it”, states Ragnar Lifthrasir, the President of International Bitcoin Real Estate Association.
Ragnar shared with Cointelegraph his ideas about the exact ways of integrating innovations into the real estate industry to make it safer and simpler.
CT: How exactly is the Blockchain being integrated into Real Estate? Will it be simple for common users to work with these technologies?
Ragnar Lifthrasir: There are three ways we could use Blockchain technology in the real estate: purchasing real estate; escrowing real estate; recording the transfer of ownership of real estate onto the Blockchain.
Right now, none of those being commonly done but we are working on it to change the situation.
One of our goals is to make Bitcoin easy to use for common users. We are working on creating companies and applications that would use Bitcoin in such a way that users would not even know they’re using it.
Right now our company focuses on real estate titles. We plan to do the record of ownership and put it on the Blockchain. In that case the users wouldn’t know they are using Bitcoin at all. It would be similar to uploading documents to DropBox or GoogleDrive – all simple and familiar.
In terms of escrow we are working on it but that’s a little bit in the future. That would be very similar to making a bank transfer. You put in the amount you need to transfer, then buy the needed amount of Bitcoins and then the Bitcoins will be put into escrow. So it will be very similar to transferring via banks.
CT: How exactly does the Blockchain help prevent title fraud?
RL: Bitcoin technology can prevent fraud with real estate and titles in two ways. First when you upload your documents to the Blockchain, you prove that you are the first person with that document. And when time comes to reproduce that document – to transfer – you would be able to prove that you have the document in your possession by rehashing it. So basically Blockchain helps by creating a document that is difficult to forge.
We’ll imagine though that someone is still able to forge the document. In that case Blockchain will help you prove you are the first person to have the document. That leads us to the second part of what you need for greater security. And that’s the actual transfer mechanism.
For that, we work to provide the Colored Coin solution similar to the one Overstock and Nasdaq are using. Those two companies are using colored coins to settle security features. But we’re working on using it for real estate assets. Even though trespassers might be able to produce a fraud document they still won’t be able to transfer the property unless they are in control of the private keys. So it’s important not only to have the actual secure document that shows your ownership but also have private keys for transferring that property.
Our organization works on the provision of both solutions.
CT: What obstacles are there in building a Blockchain based and non-government sanctioned land/title registry? Could the government interfere with your plans?
RL: Right now the obstacle is not the technology. We have all the technology we need and we have had it for at least a year. The real obstacle is simply building the system and then getting people to use it. It’s like with any other business. We need to build it and prove that it’s good and we need to explain people why exactly it is good. We need to develop the right application and establish the right price for it. And that’s just what we’re doing right now. We’re trying to create the product and then we’re going to take it to the market. And charge the right price for it.
The challenge is simply to convince people this new technology is better.
The government doesn’t have a reason to hinder us because we’re not talking about money. The governments are always worried about money laundering and using money for the wrong purposes and money fraud. They don’t have as much of a concern with real estate. Our strategy is not to try to convince government to use Blockchain in their land registry.
Our strategy is to create a product with wide solutions for the industry. And once enough people in the industry will use it, the government would have no choice but to put up with it. If a buyer and a seller of a property both agree to use Bitcoin Blockchain solutions instead of government solution, nothing will stop them as long as they both agree to use it. So you can just imagine that if every big company decides to use it than it will work.
People will probably still do it with the government for legal reasons but they can go to the government after they have used Bitcoin. Bitcoin is so much easier and faster. People can establish everything on the Blockchain and then go to the government for all paper work whenever they want to.
We’re not trying to replace the government. We’re just trying to create an alternative for people to choose. It’s the same like Bitcoin currency. Bitcoin is not trying to replace fiat currencies but it’s offering a digital alternative. And we’re trying to offer a digital alternative for government land and title registry. But you can have both.
CT: Are you the first company to provide Bitcoin and Blockchain solutions?
RL: We’re not the first, but I can tell you what other companies are doing wrong. A lot of people in Bitcoin community don’t understand real estate. For example, there are few companies that are trying to use the Blockchain for real estate titles. But they don’t really understand the mechanisms of real estate; they don’t understand who pays for what. That’s the first problem.
The second problem is that companies haven’t just found enough other individuals or companies to transact with. I think that’s really been a challenge and we’re trying to fight it; we’re trying to connect people so they could work together.
The technology is right there. People and companies in Bitcoin space are out there right now building applications and businesses. They are trying to convince other companies or individuals to use Bitcoin. And the problem is that they refuse to use it because they have never done it before.
What the companies need to do is to find other people in the industry and work together to bridge that. People thought that they are just going to convince non Bitcoin users to use Bitcoin. And that is wrong. I think companies who are going to start using Bitcoin in real estate need to connect with other real estate professionals and companies. They need to have a conversation together and then discuss how to do a great work in integrating Bitcoin and Blockchain technologies and how to go forward from here.
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