Blockchain: The solution to real estate fraud
With a background in the financial industry, professor Atty Mashatan (Information Technology Management) has been involved in initiatives for blockchain and cryptocurrency technologies to be applied in the banking sector since around 2012. Her PhD research focused on cryptography, giving her a unique lens into this emerging technology.
“The reason why blockchain technology is able to offer all of these advantages is that it uses crypto-primitives that link records together, creating a tamper-resistant set of records,” said professor Mashatan. The records cannot be changed or altered easily. By removing the possibility of introducing human error, blockchain also eliminates single points of failure, which can be difficult to trace.
Professor Mashatan is applying her research to partner with industry. One industry she is focused on currently is real estate. Home buying and selling is a large transaction involving several stakeholders from buyers and sellers, to agents and financial institutions, to government agencies. She believes blockchain could eliminate a lot of the back-door dealing that happens during home sales and purchases by putting all the transaction in one indisputable log.
Current processes allow room for fraud to occur, but with blockchain technology, all bids could be recorded and viewed, as well as all of the financial transactions such as transfer funds and title transfers. The technology would speed up the process and improve transparency, which is especially important now, given that a recent ruling ordering the Toronto Real Estate Board to make home sale prices and commissions public information was upheld in the Federal Court of Appeals on Friday, Dec. 1, 2017.
“Right now there is a lot of latency that blockchain could help with,” said professor Mashatan. “If all of these transactions are happening on a blockchain, and not on paper, then we will have an immutable record. It could put an end to fraudulent behaviours such as double-ending, property scalping, and paper flipping.”
Because blockchain technology is so new, many businesses are reluctant to make it part of their external operations, but professor Mashatan is working with partners who want to integrate blockchain into their internal systems as a way to introduce them to the technology. “It’s hard to predict what will happen in the next five to ten years,” she said. “But if industries start using blockchain as a back-end technology now, by the time it goes more mainstream, they will feel confident with the processes.”
Professor Mashatan believes that with this technology, real estate brokerages can offer a more transparent experience to their customers, allowing for greater trust and satisfaction. She is currently supervising a student who is working with a real estate partner on this new business opportunity.
Professor Mashatan’s research is supported by an Ontario Centres of Excellence grant.