Trekk of Trekken Cryptos 2 Connect interview with Ubitquity Founder & CEO Nathan Wosnack
Special thanks to the tremendous contributions to this interview from both Ubitquity’s Sam Tannian-Reynolds (COO) and Wes Williams, ESQ. (Adviser).
A separate audio interview with Trekk and Nathan will be available soon on the Trekken Cryptos 2 Connect podcast. You can learn more about the podcast and Trekk, on his web-page here.
1. What’s the state of blockchain in real estate today?
Currently in the early stages. Evangelism, education, then adoption. Right now millions of titles in the US are stuck on databases that date back to the 1980's. It’s incredibly inefficient.
Applications outside of a token model involve what Ubitquity is attempting to solve. That is utilization of a blockchain infrastructure to ensure data integrity, security and immutability in an effort to reduce and prevent fraud, forgery and the like, which our current registry system fails to protect against.
As a side note, there are various other real estate blockchain applications that Ubitquity is also working on, particularly in the mortgage space to reduce redundancy of data, tracking of loan cycle for packaging and sale on the secondary market, digital identity verification, smart contract utilization in the context of landlord/tenant agreements, real estate escrows, etc.
There are also efforts involving application of a token which is used to represent either a share of stock in an SPV (Special Purpose Vehicle — a subsidiary of a company which is protected from the parent company’s financial risk) that owns the underlying real estate asset (via a REIT — Real Estate Investment Trust or RE Fund), or one that is being used as a medium of exchange to purchase the real estate ala Bitcoin.
At some point in the future we may see a token represent ownership rights in and to a particular parcel of real estate, similar to a deed, which can then be transferred via a blockchain based land registry system. Given uncertainties in its legal structure this is not something that will be happening in the US any time soon, nor is it something Ubitquity is involved in.
2. What’s the #1 trend that will shape blockchain technology in real estate next year? Do you have any update as to what states are doing what this month and recently?
The adoption of parallel recording by counties. We’ve got a ton of interest around the US and it’s simply a manner of getting them online. However, until the law is amended, recordation onto a blockchain provides no legal protection to a “bona fide purchaser” (BFP) or “bona fide encumbrancer” (BFE).
However, we are seeing a lot of positive movement in various state legislatures around the US in moving towards recognizing smart contracts via the blockchain as legally binding.
Most recently, we’ve seen lots of news out of the state of Wyoming in February.
I won’t list them all here but it does do things like recognizing direct property rights for individual owners of digital assets of all types (virtual currencies, digital securities and utility tokens), creating FinTech sandboxes, authorizing new types of state-chartered depository institutions to provide banking services to the blockchain and other businesses. Caitlin Long, an innovator, in this area has taken the forward looking approach to all of this. You can read more in her Forbes article.
The National Conference of State Legislatures (NCSL) has listed blockchain state legislation in this great resource but it is from 2018. With bills signed for Arizona, California, Colorado, Connecticut, Delaware (where Ubitquity LLC is registered), Florida, Illinois, Maryland, Michigan, Missouri, Nebraska, New Jersey, New York, Ohio, Tennessee, Vermont (where we plan to be involved in some initiatives when we join the DLGA — Distributed Ledger Governance Association this year), Virginia, and Wyoming who have the most recent bills. I’m confident we’ll see a lot more out of Vermont, particularly with our involvement with the companies there in the coming months.
3. What’s the #1 challenge to blockchain adoption in the real estate industry? I think it’d be a good idea to reach out to people in the field and get their take on how this will change the space. Talking to legislators and folks on the ground. What are your thoughts on this?
Education. The biggest challenge will be educating the industry as a whole about this technology. Blockchain technology is extremely complex and utilizes very esoteric terminology which will not be understood by most lay persons. Real estate also has its own terminology which most real estate professionals understand but likewise not understood by most lay people.
Educating the real estate community, as well as state legislators on the benefits of the blockchain will go along way in building the trust required to obtain mass adoption of the technology.
In regards to adoption of blockchain technology by various recorder/county clerk’s offices here in the US, we have to keep in mind that each state has delegated the role of maintaining land records to each of its various counties. Each of these counties have their own budgetary constraints they have to contend with.
At present, recordation onto a blockchain does not provide the requisite constructive notice without first recording it at the county recorder’s office. Thus, in order to obtain the benefits of blockchain technology, state recording statutes will need to be revised in order to provide legal protections.
In addition, and each state’s various county recorder offices would need to collaborate and coordinate their data and come to consensus on an established record of “truth” as to the current state of ownership. As mentioned, a consortium, private-permissioned blockchain may be the impetus which will bring about initial adoption within the land records system here in the US before states become more comfortable migrating to a public blockchain like Bitcoin and Ethereum.
Another challenge is determining what role current intermediaries like title and escrow companies will play within this new system. In the US, title companies play a major role in assuring title (ownership rights) to real property, and 99% of the time a title and escrow company is involved in a purchase or refinance transaction. Because the US is a deed based system, and the state does not “guarantee” title, a title company provides a good value added service by defending, curing or paying loss as a result of a defect or claim against an insured’s interest in the real estate. The challenge will then be determining what role, if any, a title insurance company will play in this new blockchain ecosystem.
RE: “I think it’d be a good idea to reach out to people in the field and get their take on how this will change the space. Talking to legislators and folks on the ground. What are your thoughts on this?”
I love the idea about reaching out to people and getting their take on things! Through my involvement with FIBREE; Foundation for International Blockchain and Real Estate Expertise; “The leading international network for exchanging knowledge between the real estate industry, the IT sector and blockchain technology”. This is a global organization (hence “International”) that brings together some of the brightest minds in the blockchain and real estate space, from a variety of backgrounds. They have cooperation and sponsorship from people like CBRE, DLA Pipe, RaboBank, and many others. Including Ubitquity LLC sometime later this year as well.
This organization regularly has meet ups and welcomes people from all walks of life with expertise that could benefit the blockchain and real estate space. The folks from BlockSpaces (blockspaces.io) in Tampa Florida have also been working to bridge that gap and get feedback from legislators, law makers, and those outside of the blockchain space for a fresh perspective.
I think that’s very important.
In terms of what Ubitquity is doing, I plan to launch our first FIBREE meet up in Chile, since I’m a Regional Chair for Santiago Chile. The goal is to get some people from government and big business at our meetups, collaborated (and translated from Spanish into English) from Chain Solutions staff; the Value Added Reseller (VAR) of ours.
4. What’s the #1 benefit blockchain brings to real estate?
Immutability, Security, Promotion of frictionless, instantaneous real estate transactions, and a much faster and efficient process in title searches and title transfer. One the data is centralized on the blockchain, instead of being siloed in different databases the time it takes to process property transfer and closure drops dramatically
5. What’s the future of blockchain in real estate?
The future of blockchain and real estate, in my opinion, would be the adoption and utilization of a global “public” blockchain ecosystem that allows for instantaneous and secure real estate transactions, along with a secure chain of custody of ownership of property, to take place at the push of a button.
See also our use cases: http://www.ubitquity.io/usecases.html.
Thank you for your time, Trekk!