Though Bitcoin still hogs most of the blockchain headlines, it’s only the tip of the iceberg in terms of applications likely to be affected by this burgeoning technology.
However, Bitcoin does provide a simple way to illustrate how many different blockchain transactions might be conducted in the future.
As a publicly-accessible ledger, blockchain record-keeping is far more efficient and secure than traditional central-server transactions.
When a Bitcoin sales transaction occurs, imagine the users of the blockchain as members of a large audience. The seller and buyer are on a digital “stage,” in front of thousands, or millions, of “people.”
In front of all those people, the seller transfers an item to the purchaser, and the purchaser hands over the Bitcoin.
Thousands of witnesses can now vouch that the buyer owns the item, and the seller received payment.
Since all the users see the same thing, they offer consensus that the recorded event or transaction is valid.
Each record is encrypted, and by decentralizing the storage of data, it is virtually impossible for hackers to change. The blockchain cannot be altered without the collusion of everyone else in the chain.
In the near future, it may be possible for a home buyer to buy a home and complete the sale by clicking the shopping cart on a website, with real estate contracts, escrows and title completed by and verified by the blockchain.
The blockchain will ensure that the buyer gets the title or deed and the seller gets the cash, and record the title or deed with the appropriate public agency.
The International Blockchain Real Estate Association promotes an “open source, universal protocol for property buying, conveyancing, recording, escrow, crowdfunding, and more…to reduce costs, stamp out fraud, speed up transactions, increase financial privacy, internationalize markets, and make real estate a liquid asset.”
Real estate agents and other housing industry professionals will need to adapt their business models to understand and enable these smart transactions, but otherwise can expect to thrive in the era of the blockchain.