Blockchain has been dubbed ‘the future of transactions’ and is expected to have a substantial economic impact – even comparable to the impact the internet has had over the last two decades.
“Blockchain is like Google Docs” – William Mougayer
William Mougayer wrote the best blockchain metaphor, when he compared it to Google Docs in his book, The Business Blockchain.
Before Google Docs was invented, if you wanted to collaborate a piece of writing with someone online, you had to create a Word document, and send it to them via email. They would then edit it and you would wait while they were making the changes, saving and emailing it back to you.
Google Docs fixed this by making it feasible for multiple people to make changes, view and edit the document in real-time.
Many databases today still work like the old databases, like a Microsoft Word document, only one person can make a change and nobody else can have access to the changes until the process is complete.
Blockchain fixes that by updating any changes for everyone to see. So, for example, banking, many transfers would be verified simultaneously at both ends.
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Notable sectors where Blockchain Technology would work
Virtual currencies (Bitcoin and other cryptocurrencies) have been the first users of blockchain technology. However, the technology has many potential applications.
Blockchain could be used in so many sectors, additional to currency, including legal business or architect planning, health care, elections and voting, supply chain management, banking, property records and mortgages.
In fact, any business where people need to collaborate on documents.
The record, the block, and the chain
The record is any transaction, someone buying something from someone else. This can be anything, even property.
All the details of the transaction are included in the record, including, the amount of the purchase, who was involved (including their digital signatures) and what was purchased.
Before a record can be part of the Blockchain, it needs to receive a verification as a legitimate transaction. Usually nodes or networks of computers verify the transaction. Each node reviews the details of the record to confirm that things happened the way all parties claim they did.
An approved record gets stored in a block, along with many others. All complete blocks received a unique code, known as a ‘hash’.
The current block also receives the hash of the block before it and this is how a newly completed block – thanks to the hash – can connect in the chain.
When it is time for another block (set of verified, completed records) to join the chain – the process above simply repeats.
How a blockchain can benefit the mortgage process
The benefits of Blockchain technology can be a real game-changer for the mortgage industry for several reasons. It can speed up transaction time, making settlements happen more quickly. Record creation can be more accurate and make the process more affordable for all parties.
- More precise record-keeping
- Lower costs for the home buyer
- Easier to confirm the chain of title
- Use of Smart Contracts
