CRT Labs was launched in August 2015 with the purpose of educating the REALTOR® membership about emerging technologies that could have a potential impact on the real estate industry. Since then, we have strongly advocated for proper security and privacy in today’s smart home, developed fantastic educational material for REALTORS®, and designed innovative and affordable solutions for monitoring indoor air quality.
Today, we are excited to be discussing blockchains, which we feel have countless applications for use in our industry. The purpose of this blog post is to give a basic explanation of what blockchains are, how they differ from traditional database models, and to provide an update on NAR’s research.
What Are Blockchains?
Blockchains are digital ledgers that are shared among a distributed network of computers and interested parties. These digital ledgers are permanent and tamper-proof because the underlying technology allows each participant on the network to interact with the ledger in a secure way without the need for a central administrator.
While that might sound complex and a bit difficult to understand, the basic idea behind blockchains is actually pretty straight forward.
This digital record of events, or ledger, maintains a continuing growing list of ordered entries called blocks. Each block is linked to the next in chronological order and contains cryptographically secured information that links it to the previous block (like a chain). This allows for information to be added to the ledger in a manner that is impossible to alter retroactively.
What Are the Benefits to Blockchains?
Beyond the fact that they are tamper-proof by design, there are many other advantages to using blockchains instead of traditional databases in your applications.
Some of the key benefits:
- Each participant retains its own copy of transactions, as ledgers are not centralized and can not be controlled or altered by a single party.
- Blockchains allow for smart contracts, meaning the ledger itself can be programmed to trigger transactions automatically based on predefined, software-based clauses.
- Decentralization of the data removes any single point of failure.
These benefits are often overlooked due to skepticism surrounding early blockchain applications involving digital currencies like Bitcoin. Although Bitcoin is the most successful example of a blockchain application, it is important to not equate the two.
Bitcoin uses blockchain technology, but Blockchains ≠ Bitcoin.
Why Is NAR Focusing on Blockchain Research?
Personally, I believe blockchain has the potential to be one the most impactful technologies of the next few decades. I also predict we will begin to see more and more blockchain-based applications enter the mainstream real estate industry in next few years. After financial tech and supply chain management, the real estate market will be the target for entrepreneurs trying to disrupt traditional business models.
CRT Labs believes that smart contracts could greatly reduce the cost of doing business. The automated checks and balances these smart contracts provide will help REALTORS® and their clients get to the closing table faster and with less risk involved. We are also beginning to see the public sector getting involved. Chicago’s Cook County is testing Blockchain-Based Property Title Transfer which could help protect rights to property ownership records.
NAR’s short term goals are to create practical, open source blockchain applications that highlight the positive aspects of the technology that can also be used as case studies by our industry partners. Our first project uses blockchain to provide an improved method of sharing membership engagement levels (committee service, education history, CE Tracking) across all local, state, and national levels of the association. We are hoping that this initial work will help lay the groundwork for adoption of more high-impact projects in the future.
NAR’s Progress To Date
Since September 2015, NAR and CRT labs have:
- met with NAR committees, advisory boards, and industry partners on over twenty occasions to discuss the potential of this new technology
- published two white papers ( 1, 2 )
- released the source code for the prototype that what will soon become our membership engagement tracker.
Over the next few months, I will be speaking at three conferences on this topic:
- 4/24/2017 RESO Spring Technology Summit
- 4/20/2017 RAMCO User Group in Chicago
- 8/7/2017 Inman Hacker Connect
CRT Labs and NAR also plan to continue developing and sharing practical blockchain solutions.
- Blockchains in Real Estate Part 1 – Technology Description
- Blockchains in Real Estate Part 2 – Applications