Citigroup is a leading global investment bank. And it says blockchain “could be a good fit” for real estate.
Traditional real estate often lacks transparency, relies on a lot of middle people, and is generally cumbersome to sell, according to Citigroup’s new report Money, Tokens and Games: Blockchain’s Next Billion Users and Trillions in Value.
Citi notes a few ways blockchain could soothe those pain points:
- Blockchain lets parties reconcile key information they must rely on. New activity is always verifiable by all concerned.
- Blockchain enforces terms of a deal through smart contracts. A person can step in when needed. But in general, using code where there used to be human record keepers is more efficient and error-proof.
Citi says adoption will be a success when “a billion plus” people use blockchain without even knowing it. Tokenization of real assets could nudge the $4 trillion mark by then.
“[W]e think mass adoption could still be six to eight years away,” Citi says. And that’s pretty soon.
Citi sees a clear trend as governments and institutions go from the research phase to actual pilot programs.
Let’s just take one example, as it’s a great illustration of Citi’s point. Down in Virginia, near the Kentucky border…
A Rural County Clerk Shifts to Blockchain
Wise County, in southwestern Virginia, is building smart land records with software from Bloqable. Steering the project is Jack Kennedy, the clerk of Wise County and the Norton Circuit Court.
It once took a workday and visits to the courthouse to prepare an abstract of title, showing a property’s history. “Going digital changed everything” and blockchain is just the latest advancement, says Kennedy.
Wise County’s new database, created through Amazon Web Services, will eventually be using blockchain and artificial intelligence (AI) to let a real estate professional get a 40-year title opinion with just a push of a button, Kennedy said.
Student abstractors have already helped to research property identification numbers and put together hundreds of digital, 40-year records. Bloqable and the county plan to scan the public records with optical character reading software to speed things up.
Meanwhile, Beyond Our Borders…
People are starting up smart record systems worldwide. Bermuda, Honduras, Sweden, Russia, Ukraine, Georgia, Ghana, Rwanda, India… All are trying blockchain-based solutions.
So is Brazil. With help from a U.S.-based blockchain firm, a Brazilian land registry has a new system for documenting land ownership along the southern coast. Without this, people keep forging deeds and ravaging rainforest — endangering the global climate.
Blockchain data is resistant to tampering, and no one can alter a title without a personal digital signature. This creates a single source of title history and modifications.
Imagine the value to owners of assets that currently have no deeds. Citi puts the worldwide value at about $20 trillion. And then there’s the potential to reduce burdens on the courts that deal with land disputes.
Take Haiti, for example, where the 2010 earthquake destroyed the deed records for many small farms. People are still arguing over land.
Disruption Is Here Now, as Land Registries Go on the Blockchain
Blockchain has the potential to create a lasting system of secure, accessible deed records. Additions, permits, and new liens can be added to the blockchain. Sellers can easily transfer all the relevant documents at once to a buyer. Property transactions will take minutes — not days or weeks.
Once land or developed real estate is tokenized on the blockchain, its value can be shared in fractions. And blockchain-based voting could allow co-owners to make efficient decisions about a property. Smart contracts could enforce the terms of their agreements.
Land registries going on the blockchain show that the future of digital property management is already unfolding.
Supporting References
Citi’s 10th Digital Money Symposium – Money, Tokens, and Games Blockchain’s Next Billion Users and Trillions in Value (Mar. 30, 2023).
CoreLedger on Medium: Land Registry on Blockchain (Jan. 22, 2020).
Stephanie Kanowitz for GCN.com: Rural County Puts Land Records on the Blockchain (Mar. 11, 2022).
Nir Kshetri on The Conversation: Blockchain-Based Property Registries May Help Lift Poor People Out of Poverty (Jun. 28, 2018).
And as linked.
Image credits: geralt, via Pixabay and Markus Spiske, via Pexels.