Jeff Garzik, bitcoin entrepreneur and founder of Bloq, a code-for-hire service, gave an overview of blockchain’s application to real estate at the International Blockchain Real Estate Association (IBREA) Conference in Newport Beach, Calif. A video of the conference is available on Youtube.
He explained blockchain technology’s benefits to the real estate business: automated payments, fraud reduction, no bad checks, more data on properties in real time, more trust in the property information, and more auditable transactions.
“You reduce fraud, you reduce bounced checks, chargeback fraud,” he said of blockchain technology.
Credit cards are a “pull” payment method, whereby any merchant who has a person’s credit card information has the ability to pull money from the card. Blockchain payment systems, by contrast, are mostly “push,” meaning “you give permission for every transaction; no one else can pull money from you ..so it’s much more secure,” Garzik said.
One of the key benefits blockchain brings to real estate is “deep data,” which refers to the ability to gain additional insight on properties and customers.
“It (deep data) allows you to make better investment decisions when you have more data stored on the blockchain. You have real-time auditing and real-time risk management…Ultimately that helps maximize sales.”
“The more data points you have, the better informed you are,” he said.
Whether you are a developer or an investor, “deeper data is always better,” he said.
Information veracity is another blockchain benefit. “Blockchains provide this beautiful timeline of transactions, filings, etc. so you have a greater amount of trust in these sets of data,” he said. “For example, when you go to the property room at the local county office, and you’re paging through property books, and maybe someone ripped out a page or scrawled all over it.”
“Blockchain provides provable data sources, much better, much more trustable data,” he noted. “Better data yields better insights, yields better execution.”
Garzik concluded by addressing a topic that he said has been in the headlines in the fintech community in recent days: a new concept called the decentralized autonomous organization (DAO). This refers to putting an organization’s business processes into computer code in which computers actually move the funds. In a DAO investment fund, the treasury management or investment evaluation business processes would be in the computer code.
“This is a fully automated ‘lights out’ management,” he said. “However, on the flip side, it’s very transparent and very auditable. You can see exactly when some of these properties are being moved. Everyone can prove that ultimately you have that provenance of title, provenance of asset transfer.”
In recent days, Garzik said the first major DAO has been funded to the tune of $100 million. “It’s not an experiment anymore,” he said. “These are real.” He compared DAOs to autonomous cars – “how do you build the insurance brackets around it?”
While this is all very exciting, he noted, “From a regulatory perspective, there’s no single gatekeeper. That causes a lot of difficulty on the regulatory, legal side.”
“At the same time, they’re breaking down barriers, they’re opening new markets, they’re unlocking budgets in Fortune 500 companies,” Garzik said of blockchains. Every central bank and Wall Street firm he could think of is investigating blockchain technology. “I think it’s time for the real estate market to do the same.”
Garzik said one of his personal projects is to build a real estate DAO. He said it functions similarly to a real estate investment fund. “It lives on the blockchain; it has full provenance of title, provenance of asset transfers. You see every record of vendors, property management, etc., going through.”
His real estate DAO is slated tentatively for Q4 of this year.
“There’s a lot more white space in this market to be explored,” he said.
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