Blockchain for Blockheads

Throughout history new technologies have gathered like a storm on the horizon. Individuals and industries looked on with fear and excitement as the next new thing threatened to change everything, some for the better and others for the worse. Along the way, both parties have been right and wrong as promised revolutions have sprung up and passed. Some changing all, others changing nothing. We are reminded of the turn of the 20th century when the horse was left in the dust as the automobile zoomed past and truly revolutionized the world as we know it. Ford was famously quoted, “If I had asked people what they wanted; they would have said faster horses.” Farriers, stable workers, carriage builders, and horse breeders watched as their livelihoods were upended. Citizens doubted this new technology as roads were scarce and often impassable, gas stations few and far between. But like all new technologies, slowly but surely, society adapts and new livelihoods are developed to pave the path and fuel the way. The steady march forward is also littered with would be revolutionary technologies that failed. Great fortunes have been lost betting on the wrong technological “horses”. Sorting out which new technologies to embrace and when is one of the greatest challenges of the ages.

Many individuals and industries find themselves watching Blockchain gather on the horizon. Some look on in fear at this strange new tech that threatens the status quo. Many attempts have been made to try and explain Blockchain with thoughtful analogies and illustrations. We will attempt below to explain it as simplistically as possible and then dive into implications it may have within our beloved Title Industry.

What is Blockchain?

Blockchain explained in one concise sentence is; an immutable record of all additions or changes to an information set that is universally accessible. In theory, anyone involved with the information set has access to the Blockchain and therefore they have access to everything necessary to authenticate and confirm all records. All details are not overtly displayed on the Blockchain, just an encrypted notation of the changes. Each person can see when something is added, moved, or modified though they cannot necessarily read what it is. If seeing a record change without actually seeing it is confusing, check out “Hashing”, as that is a whole other rabbit hole that we won’t go down here.

Along the way if there are any discrepancies, each and every person has access to the log that will show when, where, and which changes led to that discrepancy. The continually updated Blockchain is kept on each individual computer. This makes it theoretically impossible to forge or manipulate the record as this would require hacking and changing thousands of individual records. With thousands of sets of eyes watching over a universally transparent record, integrity is essentially ensured.

Implications to Land Title Insurance

The industry closest to many of our hearts which faces potentially great implications from Blockchain development is Land Title Insurance. No one really knows for certain what the ultimate effects will be on the industry, so the following is certainly not yet set in stone.

As you know, each and every piece of property in the United States has a “Title”, most sitting in some dark room in a county court house. Lately, great efforts have been made to digitize a large number of those records yet paper copies still persist. Blockchain evangelists dream of a day when each and every historical land record is uploaded digitally into a system and then connected via the Blockchain. This would instantly record each and every addition or change to every title across the country. Further, that system would be entirely searchable and authenticatable from anywhere. This would greatly change the risk profile associated with title. The Blockchain secures all additions/changes and essentially eliminates fraud. This could have a huge impact on the cost structure within the title industry.

Home buying and property acquisition will always remain a huge decision for both individuals and corporations. An industry built around servicing real estate transactions and providing peace of mind via financial protection will have its place.

PROS to adopting Blockchain

  1. It could reduce personnel costs and thus consumer costs.
  2. It could result in much faster processing.
  3. It could result in fewer claims, as it essentially eliminates inconsistencies and fraud.
  4. National standardized processes and laws could be enacted.
  5. Home buying would be faster, easier and more consumer friendly.
  6. Blockchain acts as a foundation for other revolutionary applications to build upon.

CONS and hurdles to the adoption of Blockchain

  1. It may potentially lead to many lost jobs.
  2. Attempting to build unified laws and processes across all 50 states could result in legislative gridlock.
  3. Physically uploading all records across the country could take substantial time and investment.
  4. Mandatory adoption by all industry professionals will leave some under protest and dragging their feet resulting in additional time and capital investments.
  5. Fear of an unproven technology.
  6. Sunk Costs from investments in soon to be obsolete technology will be lost.

So, Now What?

Ultimately, will Blockchain come barreling into the Title Insurance industry, knocking down the established ways and rebuilding a brave new Title world? Perhaps, but many a hurdle stand in its way. We’ve been promised flying cars and hover boards since the early 90’s, yet our cars remain on the ground and our boards are not yet hovering. When it comes to people’s homes and property rights, society as a whole is rather conservative. Many prefer not to put their “nest egg” in a new age space basket when the tried and true old basket has worked for hundreds of years.

The first time any one likely heard of Blockchain was in reference to Bitcoin and therefore the technology is intrinsically tied to cryptocurrencies. Media outlets and traditional financial institutions have widely publicized Bitcoin and other cryptocurrencies swinging wildly back and forth in value, which tends to diminish consumer confidence. It may be unsettling when the public hears that the same technology used for unfamiliar, wildly volatile, cryptocurrency is being tied to their home titles.

Blockchain has huge implications far beyond the Title Industry and focusing too narrowly may miss the forest for the sake of a few trees. Global interconnectedness is the future of all information and Blockchain is a security apparatus to allow that to happen. Time and tech march forward. Today nearly everyone owns and operates a smart phone. A device which has demonstrated the amazing simplicity that a well-designed app can bring to life. Many people already entrust their banking, health information, and their entire social lives to apps and websites allowing them to update and track things instantly. The Title Industry shouldn’t fear change, but rather strive to keep up or risk being left behind. Embracing properly vetted revolutionary technology at the proper pace is imperative to meeting the demands of a modern consumer who needs and expects everything NOW at the touch of a pinky. How quickly Blockchain technology is adopted in the Land Title Insurance industry remains to be seen. We will be watching!

Should you have any questions, please feel free to visit our website www.andersonbiro.com and one of our team members will be happy to hear your thoughts.