Meg White is the former managing editor of REALTOR® Magazine.
Many companies launching today pledge that blockchain technology will revolutionize life. But how real is that promise? “Just adding the word ‘blockchain’ to a business doesn’t make it a winner,” tech educator Bill Lublin told attendees Sunday at a session at the REALTORS® Conference & Expo in Boston. However, he noted that for people who aren’t steeped in the technology world, it can be hard to tell the difference between hyperbole and help. “If you don’t understand the blockchain, you might not understand if you actually need it.”
Lublin, e-PRO, GRI, CEO of Century 21 Advantage Gold in Huntingdon Valley, Penn., said one way to determine if a company or product if legitimate is to figure out if it’s tackling a problem that blockchain addresses in a unique way. For example, some of the reasons experts are excited about blockchain are its potential to offer anonymity, the immutability of the data, and its lack of a centralized authority. “If those things aren’t important it might not be a big deal,” Lublin said. “Ask yourself: Could I do this without blockchain technology, maybe with a centralized server?”
The best-known application of blockchain technology is bitcoin, one of many digital currencies that have been launched using distributed ledger technology. Lublin noted that most of the reporting about real estate transactions being done in bitcoin are misleading. They’re generally bitcoin-to-currency transactions, where the buyer converts their bitcoin into cash to buy the home. Lublin likened the news coverage of bitcoin home sales to an imaginary transaction where he sells his vast comic book collection to finance a home. “I don’t consider that a comic book transaction,” he said. The one fully cryptocurrency example Lublin could verify was a land purchase in California, but he posited that the real estate value seemed unproven and that the deal may have been “as speculative on the part of the seller as it was on the part of the buyer.”
Part of the reason these types of transactions are so hard to find is the unmoored nature of the currency itself. “Nobody is carrying a coin with a B and a dollar sign on it in their pocket,” Lublin said, noting that bitcoin is entirely digital, with no intrinsic value. “It’s pieces of a database That’s why it’s so volatile.”
In December 2017, one bitcoin was said to be worth more than $19,000, but the value is less than half that now. Lublin compared the rapid rise of bitcoin to the feeling a real estate professional might have watching buyers participating in a bidding war on a listing. “Have you ever thought at the end, ‘I can’t believe they paid that much for that house?’” he asked. “Well, they can actually live in the house until the value catches up.”
There is potential in projects using blockchain to facilitate fractionalized ownership of larger real estate developments, and in recording property title data, Lublin said. But overall, skepticism is a good starting place for any new technology. “Blockchain gets mentioned a lot,” Lublin said. “But sometimes it doesn’t add anything” to the conversation.