In Kenya, buying and selling of land is very popular among the baby boomers. Most of the transactions are successful and free of any encumbrances. However, there are cases where people have been defrauded. Implementation of blockchain in real estate could help prevent problems like fraud because data can easily be verified on the blockchain and nobody can tamper with it. If the data is registered on blockchain, the purchaser can be able to verify the details he or she requires. The data will include the land registration number, title deed, the vendor’s personal details and clearances among others which will ease the process of due diligence before any purchase.
The rise of blockchain is set to disrupt many industries in the world, real estate being one of them. One advantage that the blockchain technology holds for the real estate industry is that it is a fast process. On a normal occasion, these transactions can take up to 90 days, but with blockchain, as long as the parties have agreed on the terms of the agreement, it can be done in a matter of minutes.
Blockchain transactions are easier because they are peer to peer transactions. The blockchain will seek to eliminate third parties by using a smart contract protocol. A smart contract is a computerized transaction protocol that executes the terms of a contract and facilitates all steps of contracting process (Szabo, 1994). Computer program enforces a contract between two or more parties. It executes the rules when all conditions are met.
Smart contracts are built on blockchain and inherits blockchain property (i.e., immutable, distributed and decentralized providing digital security). Smart contracts are self-executing. They eliminate the third party by solving issues in a way that does not require trust and remove human judgment. The smart contract facilitates, verifies and enforces negotiations by implementing deterministic rules through a logic in a computer code (Buterin, 2012).
Smart contracts help to exchange money, property, shares, or anything of value in a transparent, conflict-free way while avoiding the services of a middleman. Smart contracts not only define the rules and penalties around an agreement in the same way that a traditional contract does, but also automatically enforce those obligations.
Land registration in Kenya will become far much easier on the blockchain. In a recent transaction, owners of a certain plot of land in Kiambu county opted to register their transaction land on blockchain. That piece of land valued 300 million Kenya shillings changed hands for 3 million UBN, and crypto-currency built on ethereum blockchain. This exchange of value generated a Transaction Hash, that serves both as a receipt of the proceeds of sale and a permanent record of the transaction (i.e. Title Deed). The Transaction Hash reported the status of the transaction as Success. Transaction Hash also shows the number of confirmations it took to validate the transactions so that it may be added to a Block, which will be attached to earlier blocks on the chain. The Timestamp records the exact time of the transaction and many more details.
A transaction record generated on blockchain will rapidly replace government generated records such as title deeds for lands. The blockchain technology is here to change the world. It is going to make work easier in many industries. We are lucky to be among the first people to embrace this technology and benefit from it.