If you live in a developed country like the United States, chances are you’ve dealt with asset or ownership transfers of some sort. It can be as simple as a handshake after you’ve sold your precious collection of baseball cards to a friend, or maybe you’ve purchased a car or even a house.
For simple ownership transfers of small amounts, you normally don’t give too much importance to a contract or a receipt.
However, as you move up to expensive assets like cars, houses, fine artwork, jewelry, expensive watches and other assets of value, you would normally want some paperwork like a deed, a title, a receipt or other certificates that prove you own it.
For real estate, normally ownership is conveyed by a land title. A title is a legal government-issued certificate that states that the bearer owns the property. Often you only give the title when you have received a full payment subject to the terms of a contract. Normally, for these types of traditional ownership documents, there is a centralized repository. In the case of a title, it is the Registrar of Deeds or whatever it is called in a particular place.
In some less developed countries, such as those in Asia and Africa, land titles are sometimes faked, and the buyer realizes too late that the land title he paid for is counterfeit.
On a blockchain, the record keeping can be decentralized. A blockchain is a network of global servers owned by a community operating with the same operating system. Ethereum, a popular blockchain network, has around half a million servers around the world that operate independently of each other. All Ethereum servers keep identical records and are synchronized several times. Newer blockchains run even faster.
Blockchains keep synchronized records, but their ownership is decentralized, meaning no one can connive to create bad records. In the case of Ethereum, if a server owner is caught creating bogus records, their stake of expensive Ethereum is slashed from them. This is somewhat similar to confiscating a security deposit or bond if you do something bad with the integrity of the system.
Think of blockchains as global, multiple synchronized ledgers or record books. Thus payments, transfers of ownership and other records and transactions can be recorded and no longer be contestible once the record is finalized by the system. A blockchain is a technology, like the Internet. We probably haven’t yet really thought of all the applications and possible use cases it can do for us.
Blockchains can perform transfer of ownership. If, for example, it is used for real estate title records, once a buyer has completed his or her payment to the real estate seller, then the blockchain records that the digital ownership has transferred from the seller to the buyer. Once this is done, the record becomes immutable. It can no longer be contested. The former seller cannot resell the property to someone else because the digital certificate of ownership on the blockchain has been transferred to the buyer.
For most companies right now, many of their IT departments or staff are testing blockchains in a limited capacity. In retail businesses for example, many companies like Starbucks and McDonald’s and others are testing the use of Non-Fungible Tokens (NFTs) on the blockchain as part of their loyalty program strategies.
Other companies that are more advanced in their testing like Visa have integrated stablecoins like USDC on the Solana blockchain as alternative payment means for some of their customers who ask for it. Still others like Tesla and Microstrategy have integrated blockchain tokens like Bitcoin as part of their corporate treasury strategy. Financial institutions and companies like Siemens, for example, have already started to issue digital corporate blockchain bonds.
Moving slowly but surely is probably the right way to go at this time, as the entire industry is still developing.
Although blockchains have been in development for many years, it became popular in 2008 after the global subprime mortgage crisis, with the launch of Bitcoin. Soon, other blockchains like Ethereum, Solana, Cardano and others were developed. But, all of these blockchains are basically synchronized ledgers or record keepers that can detect if a fraudulent record is being attempted to be recorded into the system.
The future of blockchains for determining the ownership of real-world assets has many positive implications. In the real world, there is a lot of fraud and crime that happens with traditional centralized records. This is what blockchains hope to change.
[wpts_spin]{Read|See} the {entire|full} article {on|about} real estate tech innovations, or, read more news about {Arizona real estate investing|real estate investing in Arizona|real estate investing in Arizona}. We {warmly |}{welcome and |}encourage you to {mention|recommend} our site to your{ circle of|} fellow investors, {letting them |allowing them to }benefit from the valuable{ resources and|} insights we provide. {Thanks!|Thank you!}[/wpts_spin]