State soon to be epicenter of Blockchain real estate deals

BOULDER — Colorado is likely to become the epicenter of the national transformation to Blockchain real estate and other commercial transactions, thanks to the election of Jared Polis as governor.

Speakers at a session today detailing the impact of Blockchain on real estate, during the annual Boulder Valley Real Estate Conference organized by BizWest, said that Polis was the founder of the blockchain caucus in Washington, D.C., in his role as Colorado’s Second District U.S. representative. The platform that he used to run for governor details multiple steps that he advocates for the state. Polis background prior to politics was in technology.

Blockchain is a worldwide computer network housing digital records, called blocks, that are linked cryptographically. Each block contains a timestamp and transaction data. Because the network is so dispersed across the globe, it is resistant to modification and thus secure from hacking and fraudulent activity.

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Within the Blockchain can be found cryptocurrencies, such as Bitcoin, as well as records such as property records.

Anthony Meisner, a sales representative with Land Title Guarantee Co., said that the future of real estate transactions will have all documents necessary for a transaction available on Blockchain, so that transactions that might have taken days in the past will take minutes. It will make transactions much more efficient, he said.

The movement of property records to the Blockchain has begun with Cook County in Illinois moving its title records to that network. Boulder County and many other counties have moved to digitize records, which is a necessary first step before those documents can be available on Blockchain and used in transactions.

But while places like Boulder are moving quickly, and have companies and individuals already well immersed in the technology, the rest of the nation has not caught up.

“There are 3,100 counties in the United States, and only half have their records digitized,” said Jim Merrion, a Realtor with Coldwell Banker. Merrion has transacted real estate deals using the Blockchain and cryptocurrency.

Cryptocurrency can be considered like a variation in traditional currency like the Dollar, the Euro or the Yen. It trades at values that shift based upon markets and has been volatile, although the experts at the real estate conference expect that it will stabilize.

Real estate transactions can occur completely in cryptocurrency if buyer and seller agree, but if a lender is involved, the cryptocurrency has to first be converted to cash.

“We get asked, will you accept Bitcoin,” said Cameron White Ford, who works with Elevations Credit Union, the leading mortgage lender in Boulder County. “We’re fine to use it, like a Euro, but we need to convert it to dollars first. I don’t see that changing,” he said.

Elizabeth Million, vice president of mortgage lending for Elevations, said the credit union is required to validate the cryptocurrency and validate who owns it and where it came from — just like it has to determine the origins of any large amount of money.

Ford said he doesn’t expect the paperwork aspect of real estate transactions to change to Blockchain very quickly, because MERS, the Mortgage Electronic Registration System, touches 65 percent of real estate mortgage notes, and it has its own electronic vault for securing transaction data and isn’t likely to change how its operates.

But Merrion expects that transactions will move to Blockchain because it bypasses problems with security of information. No longer can the buyer and seller disagree after a transaction about the details, because the record will be locked in the Blockchain and witnessed by anyone running the software anywhere in the world.

Merrion said that every industry, not just real estate, is looking to adapt to the Blockchain technology. It may even be a solution for the problems the country faces currently with the security of voting information.

“In 1994, Netscape brought the world wide web to everybody but we used it to share jokes and cat videos,” Merrion said. “We’re moving into the necessity phase where this technology is essential to companies and how they operate,” he said.

When it comes to real estate transactions using Blockchain and cryptocurrency, Realtors first need make sure they have a title company on board to insure the transaction. Then buyer and seller have to agree on when the cryptocurrency will transfer to avoid volatility issues with value of the currency.

Making sure the transaction is handled by reputable firms is also important. Bryan Young, a consultant with Live Blocks, said parties involved in the transaction should consult with an expert to determine that they have reputable parties involved and that they have secure wallets to store their cryptocoin. At present, the transactions are complicated. Young’s process has 20 steps, for example.

Once a Blockchain document is considered a legal document, Young said, then the technology will move quickly. Vermont has taken that step, and he expects Colorado under its new governor to quickly join those ranks.