The real estate industry is rapidly modernizing, an effort spearheaded by rampant digitization of the industry. For example title deed records are being digitized and stored into public or private archives, and sometimes blockchains are used. There is a strong case for digitizing mortgages as indicated by this paper by Cognizant. However, industry convention is to store digitized information on central servers utilizing disparate systems with little interoperability. The result is that digitized data is not standardized and a lack of transparency results in wasted time on data verification and due-diligence of both the counterparties as well as data. Moreover, document integrity is fundamental to public trust in archives and a conventional, centralized data architecture forces stakeholders to blindly trust the data reported by government agencies or banks, depending on who is the provider.

Ultimately, we trust in the reputation of these institutions, not in their specific technological systems in place. Data served by such institutions can be prone to human error, susceptible to manipulation and, in many cases, different archives can show different “truths”. Depending upon the level of system sophistication of the data provider, data may be stored in archaic formats, i.e. printed on paper, which results in the need for notaries for validation, generating yet another potential data integrity failure point.

Public blockchains as the backbone

Blockchain technology has intrinsic advantages over conventional database systems, such as trust-less mechanisms for money and data transfer, traceability and the chronological ordering of data. One of the biggest advantages of this technology is that it can be used as a database for mission critical data by various actors who do not need to trust each other or any third parties. Though public blockchains are not appropriate to use as general purpose databases, as storage space is usually expensive and write time can be quite long, they can still host digital fingerprints of the data (hashes). This is where we see the best application of public blockchain networks, i.e., creation of a robust audit trail of data with a chronological series of time-stamped hashes stored in a publicly accessible distributed ledger architecture.

For certain there are trade-offs between central databases and blockchain records in terms of cost, functionality, security, scalability and trust-ability. While there is a need for a common database for all things real-estate, it’s unlikely that such a solution will fill all the needs required by every involved party and it is unlikely it will ever scale if blockchain technology is used. On the other hand, if a completely centralized solution is deployed then it would hardly ever be trusted. We can certainly expect more strides in the direction of data-auditing, which is definitely more fitting to the task, as indicated by recent efforts sponsored by the UK’s National Archives dubbed ARCHANGEL. Archangel is a blockchain based p2p network built using Ethereum’s technology stack and will act as a “decentralized platform for ensuring the long-term integrity of digital documents stored within public archives” in the UK.