Global Economics

First US Real Estate Transaction in Blockchain: What's Next?

Vermont is headed towards blockchain recording of real estate transactions. Other states will follow.

Stories have been circulating about Vermont testing blockchain for recording real estate transactions.

A contact at Propy informs me that the city of South Burlington, Vermont, just became a global blockchain leader by locking in the first US real estate deed completely on blockchain.

In October of 2017, Business Insider reported Propy Announces World's First Real Estate Purchase on Ethereum Blockchain.

Natalia Karayaneva, CEO of Propy said, "This is only the beginning. With this transaction, we've broken first ground in putting the $217 trillion real estate market on the blockchain. We're starting with Ukraine, but over the coming year we plan to facilitate real estate transactions with the use of PRO tokens in California, Vermont, and Dubai."

Business Insider posted this disclaimer "Propy is the source of this content."

I make the same disclaimer.

My contact says "This first deal makes it much easier for the rest of the 49 states to iterate the process. In fact, Arizona and Colorado are next."

I have some questions and will post an addendum when I have answers.


First, this is not unexpected. I have many times commented that blockchain is perfect for real estate transactions. Real estate is low-volume, high-value. Buying candy bars on blockchain is not practical. Blockchain does not scale.

Second. This does not change my attitude towards cryptos. At some point everything will be crypto, but it will be government-sponsored and it will not be Bitcoin nor Ethereum.

Finally, and most importantly, entire chains of business will vanish.

Think of the business of title insurance. Poof!

Mike "Mish" Shedlock

34 Responses

  • Carl_R

    Mar 8, 2018

    I am one of the few people who actually collected on title insurance. I bought a partial lot, and the developer forgot to re-plat, and a couple years later, I came home to find someone had marked off an area where he planned to dig his foundation ... in my side yard...and had a title allowing him to do so. I had to buy the land a second time (the original developer had gone bankrupt). How does blockchain protect against this? I suspect title insurance still has a role.

  • Rayner-Hilles

    Mar 8, 2018

    I'm surprised this has only just happened in the US. I was aware of this happening in the UK last year. I agree mish the Government backed blockchains will outperform decentralised blockchains over the medium term. However we both know that over the next coming decade people's faith in governments will be severely diminished. The question I ask myself is which governments? Going forwards far into the future I expect more and more fragmenting of nation states. Blockchain is another technology that will aid the divorce of Texas and California from the States, Scotland from the UK, Catalonia from Spain, and God only knows how this will undermine nations with weaker governments. I came by these views by reading "The End of Power" by Moises Naím.

  • Rayner-Hilles

    Mar 8, 2018

    @Carl_R "How does blockchain protect against this?" You can anonymously pay your neighbourhood city gangster over the internet to have the developers swiftly killed in a drive by shooting. ...not sure if that fixes the situation in this case per se but it sets a precedent that changes something or other doesn't it?

  • Sechel

    Mar 8, 2018

    well said, block chain is perfect for deeds. recording deeds using block chain in no way validates crypto-currencies.

  • DFWRealEstate

    Mar 8, 2018

    Title insurance should be one of the first victims of blockchain technology. I would say good riddance! Here in Texas I refer to it as promulgated price gouging. It's one of the biggest scams going, and one of the most expensive costs for home sellers after agent commissions. Texas has one of the highest costs for title insurance in the country, and not surprisingly homeowners get virtually nothing of value for the cost. Just ask yourself when was the last time you filed a claim on your title insurance? This is one of the reasons why title companies market their services to Realtors rather than end user homeowners. A huge portion of the premiums paid for title insurance here in Texas (rate for premiums set by the state) goes to administrative overhead, not claims. The cost of the premiums in many cases has NOTHING to due with the risk of the policy, and you get screwed even more when you refinance because you get to pay even more premiums/cost for essentially no added risk. It's enough to make your head spin, but the insurance industry and lobbyists have kept it alive because it's profitable. Iowa figured out the scam and went to a much cheaper system years ago.

  • Blacklisted

    Mar 8, 2018

    I would have thought New Hampshire would be ahead of Vermont in the move to leverage the efficiencies of cryptos. Although, the move by socialist safe-state's like IL toward bitcoin for tax payments shows financial desperation is also a driver for crypto adoption. The leading states in the race to become "crypto valley" are WY and AZ, but the obvious benefits of security and efficiencies will force not only states, but businesses into the crypto world. Below are just a few more examples of how the blockchain will be utilized: Mish, it's encouraging to see you've softened your position on cryptos. In the past you would have argued that these states, and companies like Porsche, GE, FedEx, and many others are wasting their time and money on blockchain-based technologies. However, your belief that they must be "govt sponsored" demonstrates you still don't understand the decentralization driver behind cryptos. Although, I'm not sure what is implied by "govt sponsored". If it's a rubber stamp registration fee to make sure govt gets its cut without adding value, then I can see the crypto world tossing them some lobbying bread crumbs to maintain their facade of importance. However, if you think cryptos need govt to move forward, then you don't understand the declining trend of govt trust and confidence, which is a giant snowball that has not yet reached the cliff. Govt, by its very nature, is always light years behind the learning curve, and when confidence hits the rocks below, they will come begging to be included, or risk a revolution. Your CYA disclaimer about "it" (crypto) not being Bitcoin or Ethereum is meaningless. No one has been saying that Bitcoin or Ethereum would be the only cryptos. Your statement is like saying credit cards will not advance because the Diners Club Card won't be "the card". Bitcoin and Ethereum - along with Litecoin, Monero, and the other initial coins are driving the competition for improved solutions.

  • whirlaway

    Mar 8, 2018

    Has Mish written anything about this? - I don't see anything on this site about it.

  • Carl_R

    Mar 8, 2018

    Haha. Actually, in my case, the title insurance worked. I was able to buy the land a second time, and all my costs were covered, so I was made whole. On the other hand, I don't know of anyone else who ever collected anything off of a title insurance policy, so the cost of them is remarkably high. Rather than saying Title Insurance will vanish as a result of this, I would rather guess it will remain, but the price will drop substantially.

  • Snow_Dog

    Mar 8, 2018

    As the ramshackle US economy careens headlong into the abyss, crypto currencies are starting to look promising. We’re already pretending to work, Bitcoin will help TPTB to pretend to pay us.

  • az_dirt

    Mar 8, 2018

    One topic I've never seen discussed is how a blockchain ages, in particular with smart contracts. Real Estate lasts forever. As the smart contracts evolve, for instance when specific plat information is added to avoid duplicate titles, how does the encrypted, unmutable transaction the person in the story entered into get modified with the new information? How do you fix a mistake in a smart contract? The docs for our current house had the correct property location but gave a mailing address that transposed the house number. That got propagated to the property tax department who mailed reminders to that location until we became responsible for paying the taxes and I got the mailing address corrected. For a time there will continue to be a paper trail of RE docs and the processes for recording documents on paper will continue, like other IT projects(think accounts receivable, accounts payable,) eventually that will be abandoned or at least forgotten by those involved in RE transaction (eventually maybe nobody but the two parties.) I hope the system is well engineered with geographic dispersion. Even if the primary system is destroyed in a hurricane or nuclear exchange, property ownership records need to be maintained for hundreds if not thousands of years.

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