Blockchain Technology: The Brave New World of the Conveyancing Sector?
Proptech is a growing industry that is forcing legal service providers to consider how they interact and use technology to improve the property moving process; however, could latest technological innovations force us to redefine the way we view property ownership?
The current land or property ownership model has existed for thousands of years. Land ownership and the buying and selling of land was commonplace in the latter stages of Ancient Egypt. Similarly, if we look to the 10th Commandment, it becomes clear that not ‘coveting thy neighbour’s property’ was important enough to be placed as the footnote on Moses’ stone tablet at Mount Sinai.
When property is one of the oldest forms of capital, a change to the system would certainly be considered revolutionary. Much like the way cryptocurrencies are carving out a section of the financial market, proptech companies and technology savvy users can see a gap in the real estate industry.
Ian Khan, TEDx Speaker, has commented: “As revolutionary as it sounds, Blockchain truly is a mechanism to bring everyone to the highest degree of accountability. No more missed transactions, human or machine errors, or even an exchange that was not done with the consent of the parties involved. Above anything else, the most critical area where Blockchain helps is to guarantee the validity of a transaction by recording it not only on a main register but a connected distributed system of registers, all of which are connected through a secure validation mechanism.”
This is manifesting in the business sector, where blockchain technology is being used to alter the face of how people can lease business space. This is viewed as a preferable alternative to the current system as information that is held on a blockchain exists as a shared, and continually updating, database. The information is not held in a single place with no centralised version, records are public and easily verifiable. The benefits and potential breakthroughs in the conveyancing sector become clear here; full transparency and ease of communication will be a direct implication of a conveyancing blockchain.
William Mougayer, Venture Advisor, has explained the benefits of using blockchain on a wider basis. “The traditional way of sharing documents with collaboration is to send a Microsoft Word document to another recipient and ask them to make revisions to it. The problem with that scenario is that you need to wait until receiving a return copy before you can see or make other changes because you are locked out of editing it until the other person is done with it.
“That’s how databases work today. Two owners can’t be messing with the same record at once. That’s how banks maintain money balances and transfers; they briefly lock access (or decrease the balance) while they make a transfer, then update the other side, then re-open access (or update again).
“With Google Docs (or Google Sheets), both parties have access to the same document at the same time, and the single version of that document is always visible to both of them. It is like a shared ledger, but it is a shared document. The distributed part comes into play when sharing involves a number of people.
“Imagine the number of legal documents that should be used that way. Instead of passing them to each other, losing track of versions, and not being in sync with the other version, why can’t all business documents become shared instead of transferred back and forth? So many types of legal contracts would be ideal for that kind of workflow. You don’t need a blockchain to share documents, but the shared documents analogy is a powerful one.”
Whilst technologists will argue that the future for purchasing property lies in systems like this, the first use of blockchain has originated in Amsterdam through office space company Primalbase. The company are essentially leasing a traditional shared workspace, renting out high-quality offices and shared spaces to companies and individuals.
However, it is the medium and system they use to rent this space that is unique to the sector. As opposed to renting out specific offices in predetermined locations, Primalbase sell digital tokens to their customers. The PBT digital tokens are used in a similar way to a membership card; using their tokens to rent available space when it is needed, in a location of the user’s choosing. They are also free to sell their tokens on cryptocurrency services. This gives users the freedom and transience to look for property in a place and time that suits them.
Ralph Manheim, CEO of Primalbase, has stated “The main objective for us to create ownership mentality via a token is to cultivate a community. We saw that many other coworking spaces were just a collection of part-timers, with no real connection to the other people sitting next to them.”
The idea of people having the freedom to choose their space and cultivate a community of like-minded individuals is reminiscent of a time before formal ownership rights were established; a time when humans collaborated and worked with land together in a tribal setting.
Whether humans can separate their residential property from the shackles of the current ownership and economic model is unlikely. After all, our economic model places so much importance on house prices that it seems impossible for the Primalbase’s model to move into the residential sector.
However, the technology, already successfully used within the business sector, could transfer into the conveyancing process and could be the brave new world of the house moving process.
Will blockchain technology create a more transparent and collaborative system? Or, will it create a haze of ambiguity and confusion?