Blockchain and crypto is currently changing our lives. The way we undergo transactions and business, in general, is being revolutionized. Think back to when credit cards became huge and the overall digitalization of money was normal.
That was just the start, now we have payments in cryptocurrency and more financial security in the use of blockchain. Though diving into this new field and learning how it works can be quite confusing. So today let’s check out some basic information about it. Then lastly talk about how blockchain is useful in real estate and why NuOp uses it!
What’s A Blockchain?
Simply put a blockchain is a collection of computers forming a chain that keeps track of many different things. Such as payment information, sender and receiver data, and amount of money transferred, among other info. Blockchain is a secure and efficient way of digitally notarizing data without needing a middleman.
Originally made to be a solution for the issue of dealing with digital documents, its mission has adapted with the onset of cryptocurrency. The information explored by this paper, notarizing and authenticating digital documents, however, was only the first step. It does all this with clever usage of cryptography and other tools. With all of this being explored it was only a matter of time before the applications of blockchain were expanded upon. The idea of safely and reliably authenticating data digitally is a massive game changer.
Now we see things like deeds, payment info, and more, secured in the same way. Using blockchain!
Ok, But What Is In A Blockchain?
The blockchain consists of multiple blocks, hence the name. In these blocks, there are packets of information that contain:
- Useful Data
- An Identification code (hash)
- The hash code of the block prior.
The ‘useful data’ is unique from chain to chain, it depends on the context. If we are talking about NFT or crypto transactions the data would be different. There may be sender and receiver data, the date and time, and the content bought. Now in a real estate lens, it could be things like property address, tax info, old owner, new owner, price tag, and so on.
As you can tell a block in a chain holds a lot of information. What happens when it fills up? When this occurs the hash comes into play. The hash is calculated and stored on the block. This hash is 100% unique to that block and never repeats when a new block is created. This new block records the previous block’s hash and this ultimately creates the chain! Fun fact, if you trace all the blocks backward in this manner you could find the first block on the chain, aka the “genesis block”!
When a block is filled and hashed, it becomes very very difficult to go back and mess with any block on the blockchain. This combined with crazy cryptography with the hash codes, is a strong base of security for the blockchain.
How about an example to put this all in perspective?
The most used and easiest way to put all these pieces into an example is talking about a bank. Makes sense since that’s one area that is heavily affected. So let’s look at how banks handle your info and how bitcoin, run off a blockchain, handles it.
In a bank when you want to open an account, you speak to a rep who works there. They open up a bank account for you and your info is stored in the bank’s database as well as their network. This info is stuff like your account number, real name, address, funds, and so on. This database also acts as a ledger and tracks all the purchases you make. Think of your mobile banking apps that track and list your purchases. Wondering where all this is stored? Well on the bank’s servers! This could be in one central location or many.
Since the banks then have control over their servers they can freeze your funds, make changes to its system, or to your ledger. Now, this is a good thing some of the time. If you experience fraud for example.
On the flip side, however, since they have full control they can place restrictions on your funds. Even on when and how you access it.
Bitcoin and crypto turn the tables on this entirely.
Bitcoin and Crypto:
To start with, you do not have to talk to anyone to open a bitcoin account. Or more commonly now, open a crypto wallet like MetaMask. Plus most if not all of these are free. Also unlike banks who have complete control over your data, Bitcoin is decentralized. Meaning you have full ownership. In other words there is no overlord of Bitcoin, no elders, or middleman governing body. All the data in Bitcoin and other cryptocurrencies are stored in thousands of computers called nodes. And each of these nodes has a complete copy of the corresponding chain!
Even cooler each one of these copies contains every transaction ever made. And as a new block is created on the blockchain, this block is sent to all the other nodes in the network. This makes sure that everyone has the same copy of the same chain. Finally, all of these nodes serve one very critical function. Error correction.
Simply, this means that when something new is added, the nodes in the network compare each other’s copy to make sure nothing funky is going on. If anything is wrong it is flagged and then fixed. So if any hacker or bad actor tries to tamper with any block they have a lot of work to do. As to gain access to a blockchain you have to trick every single block and node. Secondly, other nodes take notice quickly and will act quickly to correct it.
Why Does This Matter To You?
Finally, we reach what may be the more important part for you. Why does this matter to you? How will it affect real estate? You already read a lot, so if your sill here thank you! Also, I will keep this as short as I can for you. Let’s do it.
Titles and Deeds
This one is simple yet overlooked. When you get a deed to prove you are the owner of a property, it’s a slip of paper. This paper you most likely keep at home in a safe. Some organizations keep digital copies but overall it’s still centralized. It can be hacked, deleted, or just lost due to some human error.
If stored on a blockchain this would not be able to happen. No more paper trail and no input from the government or humans. It would also make the deeds or titles available anywhere in the world. And make it easier to check them.
This is one of the aspects that make Blockchain possible. It is the method of using a symbol, a token in this case, to hide sensitive data from the public. For example, a Paypal account or anywhere you put in your credit card info. When you put in this information the site makes a token so that outsiders can’t see it but transactions can still happen. This makes it safe for you and you do not have to keep re-entering your card info.
This would make exchanging assets faster and cheaper overall!
Investments/Funds and Sales.
If your real estate funds were tokenized, overheads would drop quite a lot. There would be more liquidity to assets and shared properties would be easy to manage. Smart contracts also revolutionize sales. The buying and selling process would in return be quicker.
You want to be able to trust other agents when you are buying a home. And you want to trust your fellow agents when you refer them. Using blockchain you can theoretically see everything regarding a property!
(PS NuOp uses blockchain technology as well to hit on some of these points.)
Hopefully, this opened up the world of Blockchain for you. As you can most likely tell this tech has some crazy innovations coming over the horizon. Some of which are already in arms reach. And if you jump on this trend now you will be able to ride the storm ahead of others who disregard it. One great way of doing this is by using NuOp! Again we use some blockchain and it’s meant for your security! As you can see chains can provide some top-notch privacy and defense. And as always thanks for reading and make sure to check out our other blogs for more info on various topics!
When writing this blog, I used this great article as a baseline. Make sure to give it a read if you want more information.