This Virginia state is trying to use blockchain-like technology to store let

Among possible applications for blockchain technology, real estate titles – some legal land that many people only think of when going through the paperwork to buy a house – may not be high on the list.

Country titles do not involve digital goods or cryptocurrencies, but these records have features that can be used for digital ledger storage: They are generated by interactions between people and companies that often have no previous relationship, they require long-term storage and trust, and they are often limited to paper journals.

And due to the non-trivial sums at stake in most land transactions, participants have to pay third parties to investigate the records.

“We still have a thing called title insurance, where someone actually has to go out, go to the local municipality, look for a paper title in a file, and then, you know, pay a lawyer,” said Ather Williams III, a senior EVP for digital innovation at Wells Fargo, in a panel on blockchain opportunities at the Collision tech conference in Toronto in June. “I think there are places where blockchain can be very, very effective in increasing efficiency.”

A rural jurisdiction in the southwest corner of Virginia is now trying to do something like that. Wise County’s Smart Land Records Project aims to store country titles on a private blockchain-like system, with each change unchanged.

“You can not delete these smart records,” said David FitzGerald, founder and CEO of Bloqable, the Arlington-based firm working with Wise County on this project. “They are there for posterity.”

The project stores these real estate titles in Amazon Web Services’ (AWS) ‘Quantum Ledger Database, a host event that FitzGerald said lacks the decentralization of a real blockchain, but meets customers’ desire to retain more control over their records than a publicly distributed blockchain would allow.

“This is a blockchain-like ledger that we think is as safe as we can get it – and super-economical because it’s on AWS,” he said of the plan. So far, more than 1,200 titles have been entered into this ledger system.

Security is important because title fraud happens. Successfully creating a fake title and getting it insured allows a scammer to sell property they do not own with a 100% profit margin.

The immutability of blockchain records, where each change is jointly registered by the nodes in that blockchain, makes this type of theft easier to detect, FitzGerald said. What if a mistake is not caught before a title is written for this immutable ledger? The system allows Wise County to write a new record on top of the old one, which appears first but does not delete or delete the old record.

The second part of this project involves automating the process of generating the “abstracts” that summarize a property’s ownership and (in Virginia) its last 40 years of value of transactions. The project aims to develop machine learning systems to prepare at least parts of these abstracts, a task that today, said FitzGerald, requires about three hours of work by trained professionals.

Title holders can lose, but the elected official who oversees this project predicted that property buyers would win if this makes title insurance cheaper – or unnecessary.

“The bull that will potentially be killed are title insurance companies,” said Jack Kennedy, a clerk at Wise County and the City of Norton Circuit Court. He added that the relative smallness of the Wise County – the 2020 census registered 36,130 inhabitants and 16,644 housing units – made it a feasible place for this research and development effort. In a conversation in May, he estimated the county’s costs at around $ 200,000, some paid for by a state-run technology fund for county officials.

A real estate agent based in central Virginia gave no objection to the prospect of making title uncertainty obsolete.

“In theory, it makes a lot of sense to have a single way that we can undoubtedly tell how a title has been acquired, transferred and sold,” said Jim Duncan, a partner at Nest Realty in Charlottesville. “I like the concept of having the blockchain as the only source for the title.”

Wendy Henry, head of blockchain and digital assets at Deloitte Consulting, said in an email that other attempts to store country titles on blockchain systems had failed. Cook County, Illinois, for example, did not continue a 2016 pilot project that she said reflected the difficulty of data migration.

Henry suggested that the best use cases for blockchain-stored land titles would be in countries outside the United States with less reliable record keeping and more government corruption. “Having an unchanging record that is cleared is a huge advantage,” she wrote.

Douglas Heintzman, chief catalyst at the Blockchain Research Institute, a Toronto think tank, agreed.

“The biggest impact for real estate registers is currently in geographies where there has been a lot of corruption in public offices, and as a result there is little trust in the truth of titles,” he said in an email.

But as mentioned in a report from the Organization for Economic Co-operation and Development from 2019 that Heintzman pointed out in his email, blockchain work in the countries of Georgia, Ghana and Hondurus also had steeper slopes to climb due to the lack of trust in the government. The need for verification of a digital ledger may not be as high in southwest Virginia, but the government is also asking less of its constituents to move to what they hope will be a more robust and cost-effective system.

Kennedy emphasized the effective government angle in an interview devoid of Web3 evangelism.

“It’s a practical problem,” Kennedy said. “This has a practical everyday application that can only get better.”