What does the blockchain mean and how does it relate to real estate? Blockchain is the decentralisation of data via a peer-to-peer network so that information is stored locally and authenticated between computers without the need for a central server. Information is highly encrypted and easy to search. For real estate, this has the potential to significantly reduce paperwork, fraud and documentation errors. This could lead to significant disruption and dislodgement of third party players such as escrow and title registries that exist to authenticate real estate records.
Blockchain is the technology behind Bitcoin which, while far from mainstream, has proved many doubters wrong and today is worth more than USD$450 / unit. As a virtual currency without any government or central bank legitimacy, bitcoin requires squeaky clean record keeping and audit trails in order to remain above reproach. This does not remove the risk of human error, but can confirm a record’s authenticity by verifying the time and date, contents and party making the submission (more on accuracy below).
Founded by a couple of early bitcoin miners (Bitcoin Mining? See video here), Ubitquity is one of the very few pioneers attempting to take this technology to the real estate industry. The team, based in Delaware, is currently looking to raise USD$650,00 with a pre-seed valuation of $3.3 million. We spoke to CEO Nathan Wosnack and CTO Christian Saucier:
What stage are you up to right now?
In November 2015 our fledging new start up took a laser focused approach and a full pivot as a company by building a singular SMB (Small-Medium Business) and Enterprise SaaS (Software-as-a-Service) blockchain real estate platform. From November 2015 onwards to the present time we’ve been involved in defining industry pain points and developing the code base for the Ubitquity platform. In early March of this year we celebrated the initial completion of our prototype, and have now started working with an organization adding large amounts of real estate land metadata as part of our “Test Group 1” prior to our initial alpha release of our platform for our customers. We anticipate the alpha to be available for our business customers this summer.
Who are your users? Individuals? Banks? Brokers?
We envision a layered approach to the adoption of this technology. The early adopters are going to be parties with the most to gain from efficiency and reduced transaction costs. Mortgage originators and title companies are natural first customer to focus on. We also have enterprise level financial institutions interested in taking advantage of a custom, (albeit permissioned version) of our SaaS platform.
What are the key benefits to users?
The ensuing environment of real estate financing and title transfers has resulted in massive amounts of document errors and fraud, stemming from the unprecedented complexity of today’s housing industry and the historic defaults occurring during the 2008 housing crisis.
To streamline and address this costly problem going forward we’ve created a platform for recording every pertinent step of a real estate transaction, including permanent storage of key documents, through a simple / user-friendly and secure portal, which permanently records the transaction on the blockchain. Since problematic title transfer of ownership still causes innumerable financial and emotional hardships to citizens, financial institutions and municipalities, blockchain technology is not only desirable but vital for improving economic development.
Key features include: easy of use, peer-to-peer storage, secured by the blockchain (we use the Bitcoin blockchain via Colu but we’re also experimenting with permissioned blockchains for custom SaaS clients so we remain blockchain agnostic), real-world integration, increased transparency, reduced search time and reduced fraud.
Practically, how will people use it – is it only when transacting property or any other time?
When property transactions occur, having an immutable record keeping process to refer back to later will be invaluable. All documents associated with the transaction of a particular property can be linked to a Colored Coin. Public information is placed into the form fields and tied to the metadata of the token representing the property. This can and will be seen on the block explorer when referencing the specific property in question.
Here’s a real-world example. Consider the recent forest fires in northern Alberta, Canada and the subsequent evacuation of Fort McMurray. Imagine that was you. Think about how easy it would be to forget to bring critical documents, such as the deed to your house, in the rush to evacuate. Having that deed in the blockchain means the title to your house is secure. Insurance companies can get the information they need to reimburse you, and you have the peace of mind of having a verifiable backup too.
What is your ambition, big picture?
Our short term objectives are scaling up in use cases. And both getting end-users and strategic partnerships in order to resolve use cases like: errors in public record, unknown liens, illegal deeds, missing heirs, forgeries, repairs and maintenance history, major system upgrades and warranties – to name a few. We are keeping it simple by working to address real world problems based on customer pain points rather than trying to take on too much too early.
Our long-term objectives are to build out a system that will ideally have recognition and integration with county clerks, and integration / adoption by title companies within the United States and Canada. The goal is for Ubitquity to have wide-user adoption by both small and incumbent players within the mortgage industry as well.
Do you think you are too early? Does it need any government support?
We don’t believe we’re too early at all based on the feedback from enterprise financial institutions, press and investors. If you take a look at the natural evolution of the Bitcoin space and the areas in which non-financial applications of the blockchain have been used, the timing is perfect.
We are not advocating for people to skip the legally mandated step of recording title transfers in the manner prescribed by each municipality. We are simply building a parallel platform that will quickly rival the currently existing antiquated structures in place today. We see our system as a 21st century supplement, layering on top of – and eventually integrating with – the archaic (and centralized) one in use today. Our system will simply set a higher standard for document recording, accessibility and utility overall. The level of trusted accuracy, and ease of use, coupled with significant cost savings for parties involved will become a no brainer for all involved in the housing industry. Since the housing industry reaches every aspect of our daily lives, we are excited to be able to democratize and reduce costs associated with real estate transactions.
Do you need any other partners / institutions to support you to get off the ground
We’ve 100% bootstrapped our prototype and upcoming alpha release. In my eyes, the support we need is pilot users actively using the platform to continue the momentum. We currently have a number of companies interested in the platform and one company that is adding a significant amount of metadata to our system while helping us build features that are both required and scalable across the real estate industries, i.e. mortgage companies, title companies.
How complicated is the technology behind blockchain?
When people refer to the “blockchain”, they really mean a group of computers talking to one another while following certain rules. That’s been done before, but Blockchain brings something new to the table: The group of computers can agree with one another without a central server. Not only can blockchain technology facilitate this consensus, but it also resists attempts to cheat it, manipulate it, or stop it. The math, algorithms, and formulas behind blockchain technology are very complex, but they have been known and used for a long time. Whenever you hear about Merkle trees, hashing functions, or public keys, these are all math-based concepts that have been around for many decades. Satoshi Nakamoto was able to bring these concepts together to create the first blockchain via Bitcoin.
How does blockchain account for human error?
Human error is inherent to humans. “To err is human; to forgive, divine” (Alexander Pope, “Essay on Criticism”). The value of an immutable record is in its continued recording of events as they occurred.
If a human does input an error, that human can easily input a correction, but a continuous record of that error and correction will remain. This is important for multiple reasons. Firstly, the knowledge of that being the case will help make those humans more cautious in their original data input. Second, because of the ability to look back and see exactly when and who made any sort of changes to the record gives that record veracity.
So for example, if an error is corrected by the same person, same day, then we can clearly see it is simply human error being corrected. However, if we see that a different person ‘corrected’ a record in the future, possibly to benefit them in some way, it is easily traceable and would naturally discourage such actions.
Eventually, we can safely assume most ‘corrections’ will simply be that. Human error corrections. There are many errors that occur now and there are ways to legally remedy those errors. In fact, there is even error and omission insurance required by title professionals and real estate agents specifically for harm caused due to human or malicious error.
But those ‘mistakes’, whether malicious or not, are much harder to source back to the original creator. At Ubitquity we envision a whole new profession evolving to fill this need. A blockchain data entry clerk, trained in a standardized format to follow best practices and ensure proper record keeping. We also envision a future where our platform is so user friendly and streamlined that virtually anyone can create and/or add to their existing record and have that ‘asset’ not only exist on the blockchain, but be an ever-evolving repository of ‘added value’ to the real world property.