The 2017 National Settlement Services Summit in San Antonio brought a title expert and an underwriter to the stage outlining the advantages Blockchain will bring to the industry. Armour Title Company President Tali Raphaely, along with Stewart Business Integration Senior Vice President Marvin Stone, discussed the specifics of this advanced technology emphasizing its significance within the title industry and its impact in many other areas.
“The Blockchain is going to revolutionize the title industry in the near future,” said Raphaely, whose title company works regularly with the nation’s leading real estate brokerages, banks and mortgage companies. “It will change how title services are performed, how the transfer of property ownership is handled, and how real estate transactions are conducted in general.”
Raphaely focused on how this technology will affect everyone in the real estate industry. He further explained to the audience what the future may hold in a manner that featured graphs and a visual demonstration using toy legos to better illustrate his point on how the Blockchain may alter the way businesses have been doing things.
“What the Internet has been to the transfer of information, Blockchain will be to the transfer of anything of value,” Raphaely said.
Stone, who is currently focused on improving the consumer experience through eSign, eClosing and eMortgage efforts and works closely with real estate, mortgage and title innovators in partnership with industry associations and technology vendors, says even experts are having a tough time explaining what Blockchain is.
“It’s fairly new, so people may not know where to begin in explaining the Blockchain function and its purpose,” Stone told the audience. “Why is it in the news? Smart contracts are also sub topics of Blockchain in eliminating the middleman, or the intermediate area. This saves both money and time. One can put his or her trust in the Blockchain.”
Stone also emphasized to the conference attendees that Blockchain is capturing the attention of big name banks and the world’s top energy companies, not just those in real estate.
“Blockchain is about security, efficiency, and saving money for homeowners,” Raphaely said. “This is going to be a market-driven process. I believe the market will demand the implementation of Blockchain. Once the public learns of the benefits of the Blockchain as it applies to the transfer of real estate, the acceptance and ultimate demand of such technology will be inevitable.”
The Recorder’s Office of Cook County, Illinois recently participated in a pilot program using the Blockchain. “The county just issued on May 30 a report of its Blockchain findings,” Stone said. “Hopefully, this will set the framework for other counties to jump in and do their own Blockchain test with digital databases to record transactions.”
“Everybody sees the same copy and information that is updated about every 10 minutes. Once the information is on the Blockchain, it’s immutable,” Raphaely said. “Additionally, in the future, anything you would want to know about a house you’re looking to buy could be on the Blockchain. Examples of such information would be when the roof was last repaired, when any electrical work done, the average costs of the utility bills, and how old the appliances are.”
Blockchain should be thought of as a distributive database eliminating the need for third parties, as opposed to a centralized database. Raphaely emphasized that if somebody tried to alter a document or transaction that had already been recorded in the Blockchain, such as by attempting to route money elsewhere from its intended recipient, the system (network) will recognize that the transaction doesn’t match the information contained in the Blockchain and, as a result, the attempt would be rejected.
Raphaely speaks to “hashes” that will be visible to those using Blockchain. A hash is a long letter and number combination assigned to each transaction. One letter or numerical change anywhere in the document or transaction changes the hash. That’s the result you see, you don’t see a document.
Blockchain, according to Stone, expedites the tedious processes of tracking other organizations down to view information- it’s all there with Blockchain. The prevention of fraud is another element when it comes to Blockchain as well in that it offers total transparencies to the consumer.
Raphaely also points out that there are public and private keys in Blockchain, and brought up email as a way to explain the cryptographic nature of the Blockchain. He compared one’s public key to an email address that everybody can see, while one’s private key is similar to your password that nobody else sees.
“Cybersecurity is also and should be on everybody’s mind when it comes to business transactions,” Stone said. “The idea that records can be changed should be on everybody’s radar. The Blockchain advantage, with such a high rate of security thefts, is that nobody can go into Blockchain and make any changes, period.”
“It’s beneficial to embrace and understand the inevitable changes. This allows us to work together to utilize the technological advancements in ways that provide better service and results for our clients,” Raphaely said. “We should all welcome any technology that makes the real estate process more efficient, less expensive, more transparent and safer for homeowners.”