June 02, 2019
Blockchain’s Potential Effects on the Title Industry
A recent white paper by Premium Title discusses potential benefits to the prospect of utilizing blockchain in the real estate and title industries—arguing that it may aid in the automation of these areas of the market. These benefits are worth discussing, so that they might enter into a broader base of recognition and critique.
First of all—the issue of what blockchain is is tied intricately to what its benefits may be. Blockchain is a record-keeping technology, a series of digital pieces of information (the “blocks”) which are stored in a public database (the “chain”). The blocks on the chain are composed of three types of information:
- Transaction dates, times, dollar amounts.
- Information about those participating in the given transaction—but rather than identifying information like a person’s given name it often uses a unique “digital signature” which is something like a username.
- Each block has a “hash” code that enables users to distinguish it from every other block.
Blockchain transactions are verified by a network of computers—from a few thousand to millions of them spread across the world. Though every copy of the blockchain is identical, this vast network of computers spreads the information widely, making the information difficult to manipulate—because a hacker would need to change every copy of the blockchain on the network, a task that at present is not possible.
Premium Title’s white paper, which points out that the sequence of title conveyance itself is referred to as the “chain of title,” makes the claim that moving the title industry to a blockchain model would benefit the industry by:
- Increasing the speed of transactions from weeks or months to just a matter of minutes.
- Improving security by making transactions more difficult to tamper with ex post facto.
- Ensuring a transaction could not be altered once it has been logged on the blockchain.
- Reducing the need for third-party intermediaries because of blockchain’s inherent “trustability.”
Still, there is the issue of encumbrances—liens, judgments, taxes, and so on—that are impediments to clear title and which the simplicity of the blockchain regime at present simply does not allow for. Title remains a murky thing, and removing title searches from the industry would only result in more chaos.
Here at Topouzis & Associates, P.C., we do extensive title search work and perform curative services on every form of real property, so that a buyer or investor knows for sure that they are getting into a parcel with clear title. Contact us if you have any questions or if you would like our considerable experience in dealing with the particularities of the real estate system.