How can blockchain and real estate “fit together”?
The theme is new and complex. Very often only cryptocurrency, the various Bitcoin, Ethereum and others are associated with the concept of blockchain. In the real estate field, however, the future goal of “buying a house by paying for it in Bitcoin” is still a long way off, both for legislation and for an objective degree of risk that cryptocurrencies carry with them.
The CEO of Immobiliare.it, Carlo Giordano, recently talked about it on this portal.
Safe network and without a single registry
Much more interesting, however, is the use of the blockchain as a way of writing contracts, transactions and the various bureaucratic steps that precede a real estate sale.
What is the blockchain? It is a completely digital and decentralized register, made up of many blocks where each of these is connected to the others in a cryptographic chain, very difficult to tamper with. Cyber-attacks are not impossible even in the blockchain system, as the IT giant IBM explains in this article. But the security comes from the fact that the information is written on every computer block and that this does not reside in a single server, but in the whole chain.
Servers of the bank
Practical example: if my bank details are stored only on the servers of the bank of which I am a customer, it is sufficient to hack them to steal them and make them disappear. In the blockchain, criminal activity is much more difficult as information is encrypted and scattered throughout the chain. Another advantage of the blockchain is the ability to register contracts, changes of ownership or other types of agreements always and only in digital format, reducing time and without wasting paperwork. And here you can go to real estate.
In Italy, for now, it is still practically impossible to register a real estate transaction only on a blockchain, without going through the usual subjects who have the task of authenticating these operations, therefore the notaries. Nor can you pay for a property in cryptocurrency. However, there are several uses in which the blockchain is finding a role.
The “Token” As A Share of Ownership
The first of these examples is so-called tokenization. A system that allows you to digitally ratify ownership shares. Take for example the corporate shares of a person who owns a property. This property can be divided into many entirely digital property titles, which run on a blockchain, called tokens, a bit like the capital of the Spa, which is divided into shares. Assumption: 1 token = 0.1% of the capital.
Applied to real estate
Also, in Italy there have been some examples applied to real estate. For example, with the token system the procedure for the purchase of shares of a company was defined, which had taken on NPL credits with underlying real estate, which UniCredit had discarded.
Or, a crowdfunding platform, Italy Crowd, has recently launched an initiative that provides for the sale of “tokens” to customers, to be spent on the platform to participate in the various real estate projects presented on the portal. For now, Italian law has not regulated the case of a property directly owned through tokens.
In the United States
On the other hand, there have been some cases that are fully part of the discussion. But even in this case with some constraints. In Florida, a house was sold at auction, with the buyer winning the property by paying 210 Ethereum in a digital audition, about $ 650,000 the valuation at the time.
All suitors, to register for the online auction, had to prove that they own a cryptocurrency “wallet”, with at least the minimum capacity required as an auction base. Even in that case, however, as several articles explain, it was not directly the property that changed ownership. The buyer has been awarded, in the form of digital tokens, the property rights of a company registered as an LLC, similar to our SRL, which in turn has the property in its belly.
The Auction Catalogs
Returning to Italy, another experiment, always in the field of real estate auctions, is carried out by the T6 Observatory and by the Italian Blockchain Association. This is called Rechain.
The two companies are engaged in a sort of digital cataloging of all the real estate assets that have ended up at auction. In practice in a blockchain. The data relating to the real estate assets subject to execution are recorded.
So as to have a history relating to the legal, financial and urban planning events of each property. The goal is to make the tool usable to public entities. Such as the Courts, or even private individuals so as to exploit digital technology to de-bureaucratize and speed up all the administrative processes and steps related to auctions.