Some of the world’s largest lenders, law firms and real estate companies are turning to the technology behind Bitcoin to streamline the process of buying and selling property.
Barclays Plc, Royal Bank of Scotland Group Plc and Clifford Chance LLP were among 40 companies to test a new platform developed by Instant Property Network, a company backed by blockchain software firm R3. IPN said it could cut the time it takes to buy a house from months to weeks and, if applied globally, could result in an annual saving of about US$160 billion.
If the platform catches on, it would be a rare example of financial firms using blockchain — the distributed ledger designed to track Bitcoin transactions — for consumer products. Most bank projects have to date have focused on areas such as syndicated corporate loans and trade finance.
“We are near the end of the hype cycle and have not found a great consumer solution for distributed ledger technology until now,’’ Dan Salmons, director for mortgage innovation at RBS, said by phone.
“Property is an industry that is ripe for this, where a complex difficult process for customers could be made cheaper and more transparent.’’
Real estate transactions often involve multiple third parties exchanging a mountain of information, which costs time and money. Blockchain could create a secure and trusted record that reduces duplication and eliminates some middlemen, according to a statement from IPN on Thursday.
“When a person wants to purchase a house, the process encompasses a whole host of different interactions with different businesses and governmental entities that can be uncomfortable and drawn out,” John Stecher, head of the group innovation office at Barclays in New York, said by phone.
“The aim of this forum was to simplify the purchasing process for the customer.”
IPN is now creating a consortium of some trial participants as well as new firms to develop and launch its platform, CEO John Reynolds said by email.
IPN’s platform allows multiple parties to work on a single property transaction and monitor its progress in real time. It plans to release the next version of the platform in September.
— With assistance by Jack Sidders
This article first appeared on Bloomberg.