The country’s first blockchain-only real estate trade involved 10 acres of land just north of Los Angeles County.
The sale was made through a platform developed by Palo Alto-based real estate startup Propy. The company’s platform records the information of the sale — the purchase agreement, payments, and other essentials — on the public Ethereum blockchain. The amount was unknown.
An unnamed New York-based buyer paid a California seller in Bitcoin for the 10 acres of land in Kern County, about 130 miles north of Los Angeles. Details of the sale were recorded both on the blockchain and with traditional government registries.
While cryptocurrencies including Bitcoin have been used to buy and sell real estate in the past, the Kern County sale differs because the entire transaction was recorded on the blockchain, not just the transfer of money.
Ethereum functions like Bitcoin, but can record any type of information on its public blockchain. Bitcoin, meanwhile, only records transactions involving its currency.
And like Bitcoin, that information is stored on the public ledgers of users around the world, which makes transactions extremely difficult to forge.
Real estate developers can use Ethereum’s “smart contracts” to build programs and platforms. For example, a “smart contract” could be built to release payment for a property only once both parties had signed off on a document.
Propy’s chief technology officer, Alex Voloshyn, told The Real Deal that the public blockchain system can help reduce fraud in the real estate sector.
“If someone called you to court to bring documents, you will be able to prove [the information] mathematically,” Voloshyn said. “The beautiful thing about blockchain is you can really prove these things with 100-percent accuracy.”
The deal followed Propy’s first blockchain sale in the U.S. in March, which was part of a pilot program. Katherine Prucell transferred her Vermont property to her LLC for $10.
The platform allows either party to use cryptocurrencies or hard currencies for transactions and will convert currency for users.
The first known Bitcoin-only real estate sale took place in Miami in December, when a Bitcoin “evangelist” paid 18 Bitcoin for a condominium unit worth around $275,000. At the time, the price of one Bitcoin hovered at around $15,000. Since then, the volatile currency has dropped to nearly half that.
Other real estate deals involving cryptocurrency converted immediately before or after the sale have become common. In May, the U.S. Department of Justice launched a probe into price manipulation.