A few benefits of using blockchain include (i) eliminating the need for original signatures to recorded documents; (ii) lowering the costs and fees associated with recording interests in real property; (iii) reducing or eliminating recording errors; (iv) making more accessible the real estate records because the real property records may be centralized and would be entirely digital; (iv) eliminating the time lag between recording a document and searching the real estate records because all changes to the real property records are reflected in real time; and (v) reducing the cost of, and premiums for, title insurance, because the real estate records will be more accessible, accurate and current.

There are a number of challenges to developing blockchain for real estate; some are mere speed bumps on the road to progress, while others might significantly delay blockchain's implementation.  First, as with any nascent technology, there will need to be capital investment to spur development.  The amount of available capital might wax and wane according to the vicissitudes of the markets, but we can rest assured that, to the extent developers understand and adapt to markets, there is not likely to be a paucity of funding for high-value projects.

Another challenge rests with the vested interests of the current system for the recording of real estate transactions.  To the extent any new blockchain technology diminishes the role of local governments—and presumably, their ability to levy recording fees and other similar fees and charges—one imagines those governments will attempt to retain those streams of revenue.  To what degree would they obstruct blockchain implementation?  It is hard to tell, but an encouraging precedent can be seen with the rise of ride-hailing companies.  In dozens of cities Uber, Lyft and others succeeded in subverting decades of regulations favorable to incumbent taxi-cab companies that were slow to innovate.  They were able to do so because the technology and business model they used raised the profile of the issue before the public, made an undeniable case for their commercial superiority and utility, and highlighted how out of touch and sclerotic the taxi-cab industry had become.  Perhaps blockchain will be able to count on a similar dynamic within the real estate context.

Aside from the foregoing, many of the remaining challenges are operational in scope.  They include evolving and updating cybersecurity protocols to maintain the integrity of the ledger; developing industry standards that collect and structure datasets; developing a robust system capable of handling the full variety of transactions, including nonconsensual transfers of real property interests (e.g. foreclosure); and establishing the supporting mechanisms required for full disintermediation, such as smart contracts.

None of these challenges are insurmountable, although, as with any disruptive technology, blockchain may take longer to implement if vested interests in the current system balk at the new technology. But new interests will evolve and assert themselves in support of blockchain.  We are confident that over time the question is not can blockchain be applied to real estate transactions, but when.

Rodney Carter and Bill Gardner are partners with the law firm Husch Blackwell LLP and are based in the firm's Milwaukee office. The views expressed here are the author's own and not that of ALM's Real Estate Media group.