Michael Arrington, is the first buyer of a piece of property using blockchain technology. The founder of Techcrunch, purchased an apartment in Kiev for $60,000 in September from Mark Ginsburg. What makes the transaction different from regular real estate deals is how it was completed. Michael used a smart contract by a Propy, a blockchain startup solving problems in the real estate industry.
Natalia Karayaneva, CEO of Propy said of the deal:
"I'm thrilled to see Propy leading the charge in putting real estate on the blockchain—bringing transparency, efficiency, and security to an industry traditionally fraught with red tape and bureaucracy."
Blockchain technology is touted as a savior for all of humanity's problems - from real estate to healthcare. It allows for people and machines to agree on terms and execute them on a platform without relying on a third party. Land titles and real estate transfers rank high on the list of potential use cases.
Propy, a startup that raised $15 million on an ICO on the Ethereum blockchain, is applying the same technology for property transfers across borders. Propy used its custom smart contract - a self-executing program that takes inputs and outputs instructions based on preset conditions.
"the Propy Registry as a DApp that allows each party to a real estate transaction — including the broker, buyer, seller and title agent/notary—to sign off on a transaction for properties."
As the buyer, Michael, did not have to set foot in Kiev or even use regular money to complete the transfer. The settlement was conducted in cryptocurrency without any brokers, escrow services, or piles of paperwork. Cutting out the middlemen is part of the appeal of the blockchain.
The startup from California is one of many tech companies connecting sellers, and buyers using blockchain powered marketplaces. REX, another company, offers listing services in a marketplace connecting foreign sellers, buyers and agents. ATLANT from New York has a more divergent approach. It first tokenizes the property on a blockchain and allows people to co-own the property or rent out their share.
Propy, however, is clear about differentiating its product in the marketplace. Their ICOwhitepaper highlighted blockchain's inability to interface with the real world as a limitation. The startup is practical about the role of government in property swaps. Using the blockchain serves to add a layer of transparency and speed that appeals to overseas buyers.
"Ukrainian real estate is very affordable, and the Ukrainian market will soon be growing dynamically. This purchase is an important signal to foreign investors—especially Chinese, who face strict capital controls of $50,000 per person—that they can safely and easily invest in this market and, soon, other countries."
From January 1, 2018, Ukraine's legislation will allow land ownership by foreign investors. Propy is an official partner with Ukraine's government to test title registries on the blockchain.