The technology's unique features make it an immensely desirable addition to the industry
The unparallelled transparency and robust security afforded by blockchain has ensured its popularity in the financial sphere, so it’s likely only a matter of time before the technology comes to Canada’s real estate market. In a study released late in January, Deloitte Canada noted that the decentralized nature of blockchain – along with the ease of storing, accessing and transmitting verified data – makes it a strong candidate for revolutionizing the industry.
“A blockchain approach … cleans the whole process and streamlines it,” says Sheila Botting, national real estate and construction leader at Deloitte Canada. “In a blockchain world, assuming that confidentiality is cleared, that property would have a property identity, so the previous people who owned the property, any of the inspections or records, and landlord information would be fully disclosed. In theory, you’re not involving a lot of paperwork, and you’re reducing the number of people involved in the process.”
The report also outlined how blockchain is an effective solution for the industry’s need for a common database, as well as how it can address the fundamental issue of good faith between buyers and sellers.
“Many times, participants in leasing and purchase and sale transactions are new to each other and could be over-cautious in due diligence and may even have data integrity concerns,” the report explained. “However, blockchain can help reduce the risk through digital identities and more transparent record-keeping systems for real estate titles, entitlement, liens, financing and tenancy.
“Blockchain technology is based on cryptographic proof, allowing any two parties to transact directly with each other without the need for a trusted third party,” the report added. “The peer-to-peer distributed network records a public history of transactions. The blockchain is distributed and highly available; it also retains a secure source of proof that the transaction occurred.”
Perhaps most important, though, is blockchain’s ability to reduce errors and fraud.
“The blockchain contains a certain and verifiable record of every transaction ever made, which mitigates the risk of double spending, fraud, abuse and manipulation of transactions,” the report said. “The crypto-economics built into the blockchain model provide incentives for the participants to continue validating blocks, reducing the possibility of external influencers to modify previously recorded transaction records.”
