Real Estate Investor Magazine South Africa August 2018 | Page 13

COVER FEATURE
PART
1
Title Deeds
BY WERNER RIEKERT
A
lmost everyone has heard about the hype around
blockchain technology, and for good reason. This
new technology is rapidly being adopted commer-
cially in almost every business sector despite the vast lack of
knowledge and understanding thereof by the general public.
However, industry leaders have realized the major impact
blockchain, and more so, smart contracts will have on the
global real estate market and industries core operations in the
not so distant future.
One of the implications we will witness in the foreseeable
future is property and land titles being moved and run on
the blockchain. And there’s an acute need to do this quick-
ly as only 30% of land rights are registered or recorded world-
wide, according to the World Bank. At the same time, mov-
ing essential real estate bookkeeping tasks to the blockchain
is a brilliant idea any society can benefit from. Let’s take a
closer look.
Case in point, Sweden
Sweden’s land registry, the Lantmäteriet, is one of the earliest
adopters of blockchain. With initial testing already complet-
ed, the agency plans to execute its first blockchain property
transaction soon. Mats Snäll, chief digital officer at Lant-
mäteriet, told the Wall Street Journal that “from the technol-
ogy point of view, we are quite ready.” When implemented,
it is expected to save taxpayers up to €100m by reducing mu-
nicipal hours spent on paperwork and lowering the potential
for fraud.
Advantages of blockchain
Before you can accurately estimate how significant the block-
chain revolution could impact real estate, you must know the
key characteristics and advantages it offers.
Security and availability
A blockchain is distributed and consists of thousands of “da-
tabases” across the globe that can be hosted by any individ-
ual or company. This not only ensures that a blockchain has
100% uptime but also makes it impenetrable by hackers or
malicious actors trying to edit or manipulate data.
Speed
Blockchain offers near real time transaction settlement across
the globe. This drastically reduces inefficiencies and risk as-
sociated with escrow, chargebacks and transaction cancella-
tions.
Trustless
Blockchain enables individuals and companies to transact
with any party without lawyers, escrow or any independent
trusted 3rd party to facilitate a transaction.
Transparency
Blockchain provides complete transparency. Every transac-
tion, account, timestamps, value, ownership or any data the
blockchain is programmed to store, is openly available to
everyone.
Why blockchain is perfect for property
titles?
Fraud and transparency
Concerned about your inheritance or recent property pur-
chase? You’re by no means alone as real estate remains a lu-
crative target for fraudsters.
Blockchain is a more secure way of transferring real estate
ownership. Right now, this process is not entirely transpar-
ent, and the information can be modified or removed.
On the contrary, blockchain massively reduces the risk
of data manipulation. Its records are incorruptible, and no
SA Real Estate Investor Magazine AUGUST/SEPTEMBER 2018
11