No Smart Contract Needed: Real Estate on Tupelo
Written by David Frey, CFS Quorum Control
When discussing the quintessential use-case for DLT, Real Estate sits at the top of the list. Its massive loop of interconnected parties relying on error-prone manual processes and (in many cases) archaic systems makes it the perfect candidate for technology built for transparency, information flow and trust.
DLTs, in general, provide a shared and synchronized digital ledger of data with no central administrator or centralized storage. The goal being, you should be able to simplify operations, with real-time monitoring, keeping your data tamperproof, and increasing transparency. With traditional DLT solutions, these goals come at a high monetary cost, are slow due to having to verify the entire history of the blockchain and most use smart contracts, which add a layer of cost, complexity, and insecurity.
Real Estate on Tupelo
Tupelo is built on a foundation that models for ownership of objects rather than currency. This new data structure, called ChainTrees, maintains a separate history for each new object (in this case, your house) which fundamentally changes how this technology can scale to meet the critical needs for real estate transactions.
First, is processing speed. Signers only need to consider transactions in the context of your specific house instead of verifying and computing every update on the blockchain. Because of this, computation and signing go much faster than on traditional DLTs. It also means that history doesn’t need to be stored in order to verify the transaction.
Second are smart contracts. A ChainTree is a combination of a hash representing the current state, and a blockchain representing the previous states of an object. Playing ordered transactions on an existing state produces a new state. This allows for a fast and clean transfer of ownership on Tupelo without the use of a complicated, insecure smart contract.
Finally, security. Documents are digitally signed with secure keys increasing the accuracy and accessibility of your asset. This transparency of data simultaneously increases the value of the home while decreasing the amount of time and cost of a home closing. All of the appropriate records are then immediately available for the next transaction whenever you need them. This also begins the building of the immutable history of that object.
Let’s look more closely at an example.
Ownership Transfer without a Smart Contract
One of the big advantages Tupelo has over other DLTs being applied to real estate is the flexibility of the data that can be attached. For example, if Alice decides to sell her house to Bob, Alice simply transfers ownership of her house’s ChainTree to Bob. This allows you as the user/owner to keep your costs and wait times low, while maintaining the benefits of immutable data and transparency. Because each house representation is now independent of others on Tupelo, much larger files of arbitrary types can be attached. If Alice had a roof repair on that house 10 years ago, that repair will be on the house’s ChainTree, along with the digitally signed documents of who did the repair, the warranty and the peace of mind that a realtor now can’t say that repair was done 5 years ago.
This means that as the industry moves from a paperwork intensive workflow to a digital copy, scans of today’s paperwork can form the basis of tomorrow’s digital representation. By providing flexibility during the transition and eliminating the need for a “smart” contract, Tupelo has unique advantages over other solutions.
ChainTrees also makes owning a fractional share of a commercial real estate asset easy. Tupelo can issue a unique secure token that represents partial ownership of a property or group of properties. Those tokens can be resold and transferred to new owners at the time of the transaction. By accumulating a detailed history of maintenance, renovations, and paperwork, tokenization can be combined with property tracking and financials for a full-featured solution to commercial real estate.
By innovating and simplifying the structure, we’ve made many parts of the real estate market much more accessible. Separating out objects, removing the dependency on smart contracts and cutting out the drag of history means that the interconnected loop of systems and players involved in real estate transactions can actually scale on DLT.
Want to learn more about Tupelo for Real Estate? Get in touch!