“Blockchain lives on a virtual network, not within a single organisation, and uses encryption with both private and public keys for access."
The infiltration of Blockchain and other emerging technologies into the property industry has the power to revolutionise the way it works, and could even see the advent of digital title deed records and the immediate transfer from one owner to another.
Smart contracts and digital payments are already in play in the local property arena, but if South Africa’s industry leaders are willing to explore Blockchain technology, it capabilities could advance here relatively quickly, the experts say.
Although Blockchain is complex technology, it can be described as a cloud-based digital ledger that uses the cryptocurrency Bitcoin, and is said to be difficult, if not impossible, to hack, says Lisa Stanley, chief executive of Oscre International.
The ledger, which can be private, public or hybrid, records transactions between two or more parties privy to it, and can only be amended or altered by changing the information in all the blocks with majority consensus.
“Blockchain lives on a virtual network, not within a single organisation, and uses encryption with both private and public keys for access. This distributed-ledger approach includes a time stamp and stores value exchanges in a permanent record, making it extremely difficult (some say impossible) to alter a record, as it would require rewriting the history of the record with all participants watching.”
The technology, Stanley says, will provide a “foundational change”. It will also cut costs associated with property buying and selling processes. “It will transform the way info is collected and shared in a variety of areas, including recording property transfers, smart contracts that include lease info that can be tied to building sustainability, sensor data related to building occupancy and use, office productivity, payments and more.”
Stanley says the current paper-based info currently used in the industry, and which starts with a notice of intent from a prospective tenant, relies on that information to be shared/transmitted with relevant parties over the lease period (and subsequent renewals).
“Blockchain technology enables this info to be shared with relevant parties in real time, and all changes occur in plain view parties who have access on the blockchain. It is transformational, and if industry leaders in South Africa are willing to explore blockchain technology, it will advance more quickly.”
In the US, some municipalities are piloting projects to examine the benefits of Blockchain for land registry and the transfer of documents. If the technology was used for the registration and storage of title deeds, it could allow for immediate transfer of title from sellers to buyers.
This achievement, however, may never come to fruition, and if it does, it will probably be a long road to navigate, says Michael Stannard, managing director of Paper Plane Ventures, which specialises in rapidly advancing technologies.
This is because the technology requires all the relevant info from governments. “One would have to convince governments to do it.”
Blockchain is being used in the fractional selling of property shares, Stannard says. Using cryptocurrencies like Bitcoin, buyers can purchase as little as R100 worth of a property. Smart contracts are already in use in the country, with the Reserve Bank, in conjunction with financial service providers, circulating the first in 2016.