Applying Blockchain to Real Estate Transactions

Rodney Carter is a partner with the law firm Husch Blackwell LLP.

Much of the discussion to this point involving the blockchain, also known as distributed ledger technology, has centered on the enormous potential it holds for financial services, especially in terms of payment schemes and the disintermediation of financial transactions; however, blockchain could have a substantial impact across many industries and applications, not least of which is real estate.

Put simply, blockchain is a system for organizing and storing data in chronological order, akin to a ledger book. The uniqueness of blockchain, however, owes to its open, distributed platform. As our colleague Bob Bowman noted in April 2018, blockchain involves discrete ‘blocks’ of data, each with its own time and date stamp.  When there is a proposed change to the blockchain, the strand of data is circulated to and verified on numerous nodes, rather than verification on one centralized server, hence the decentralized and distributed nature of the technology.  Cryptographic algorithms are used to verify the accuracy of changes to a blockchain and are sometimes described as solving cryptographic puzzles.  Although someone must solve the cryptographic puzzles necessary to verify the accuracy of proposed changes to a blockchain, each dataset can only yield one output result, such that, once solved, there is no need for secondary verification.  The combination of distributed ledger technology and cryptography results in a highly accurate and current ledger.