Updated: Jan 9
When the economy took a nosedive back in 2008 and the country was on the brink of a dismal recession, the concept of cryptocurrency took hold as a means of safeguarding ones’ money without having to involve a trusted bank or other third party. What evolved from this near disaster were Bitcoin and other digital currency companies who eliminated the need for a third party and proclaimed that all transactions were safe and anonymous.
While investors valued Bitcoin at $112M in September of 2018, it has dropped significantly and is extremely volatile. The biggest draw of Bitcoin is that a transaction can’t be altered, erased, copied or forged. That includes both public and private Bitcoin ledgers. But only a few property transactions utilize Bitcoin as currency and that isn’t expected to change anytime soon.
Blockchain - Another Type of Ledger
Bitcoin is considered a centralized public ledger technology that is built on a secure network of computers. It enables transactions between parties using online payments that don’t have to go through a financial institution. There are also private ledgers that lend themselves to other types of transactions between individuals.
What is blockchain? Remember, it’s a technology used by Bitcoin but it is also a technology that works on its own. Basically, it’s a chain of cryptographic signatures chained together. In simple terms, it’s a growing list of records that are linked together using cryptography. It provides a way for untrusted parties to come to agreement on a common digital history.
That’s very important, because many digital transactions and technologies are easily faked and/or copied. Blockchain eliminates that problem without having to use a trusted intermediary, like a bank for example.
Bitcoin relies on blockchain technology for several reasons. First, Bitcoin is a public ledger of all Bitcoin transactions. Untrusted nodes are recording those transactions and can jeopardize their integrity. In addition, Bitcoin doesn’t want to trust any third party to administer the ledger.
Bitcoin effectively eliminates the middleman in financial transactions by decentralizing payments. That database technology can also be applied to other types of transactions. One possible application is real estate
The entire land title process had traditionally been one of paper transactions. Until now, real estate and blockchain have not worked together. Now, there is strong interest in the use of blockchain that would make title registration both easier and faster. It would also make it less expensive for municipalities that manage the land title registration process.
In my podcast with DJ Scruggs, CEO of BlueSpruce elaborated on the concept of using blockchain in the real estate arena. As blockchain is a distributed network, no single entity can take control of it, so no single player can shut blockchain down.