Introduction to Blockchains & What It Means to Big Data

kdnuggets.com

 By Abhinav Venkat, Noah Data.

“Arguably the most significant development in information technology over the past few years, blockchain has the potential to change the way that the world approaches big data, with enhanced security and data quality just two of the benefits afforded to businesses using Satoshi Nakamoto’s landmark technology.”

What is a Blockchain?

Blockchain is a distributed database system that acts as an “open ledger” to store and manage transactions. Each record in the database is called a block and contains details such as the transaction timestamp as well as a link to the previous block. This makes it impossible for anyone to alter information about the records retrospectively. Also, due to the fact that the same transaction is recorded over multiple, distributed database systems, the technology is secure by design.

With the above in mind, blockchain is immutable – information remains in the same state for as long as the network exists.

Blockchain and Big Data

When you talk about blockchain in the context of Bitcoin, the connection to Big Data seems a little tenuous. What if, instead of Bitcoin, the blockchain was a ledger for other financial transactions? Or business contracts? Or stock trades?

The financial services industry is starting to take a serious look at block chain technology. Oliver Bussmann, CIO of UBS says that blockchain technology could “pare transaction processing time from days to minutes.”

The business imperative in financial services for blockchain is powerful. Imagine blockchains of that magnitude. Huge data lakes of blocks that contain the full history of every financial transaction, all available for analysis. Blockchain provides for the integrity of the ledger, but not for the analysis. That’s where Big Data and accompanying analysis tools will come into play.

Opportunities for Big Data Analytics

Recently, a consortium of 47 Japanese banks signed up with a blockchain startup called Ripple to facilitate money transfers between bank accounts using blockchain. The main reason behind the move is to perform real-time transfers at a significantly low cost. One of the reasons traditional real-time transfers were expensive was because of the potential risk factors. Double-spending (which is a form of transaction failure where the same security token gets used twice) is a real problem with real-time transfers. With blockchains, that risk is largely avoided. Big data analytics makes it possible to identify patterns in consumer spending and identify risky transactions a lot quicker than they can be done currently. This reduces the cost with real-time transactions.

In Industries outside of banking too, the main drive for adoption of Blockchain technologies has been security. Across healthcare, retail and public administration, establishments have started experimenting with blockchain to handle data to prevent hacking and data leaks. In healthcare, a technology such as blockchain can make sure that multiple “signatures” are sought at every level of data access. This can help prevent a repeat of events such as the 2015 attack that led to the theft of over 100 million patient records.

Possibilities in Real-Time Analytics

Up until now, real-time fraud detection has only been a pipe dream and banking institutions have always relied on using technologies to identify fraudulent transactions retrospectively. Since the blockchain has a database record for every single transaction, it provides a way for institutions to mine for patterns in real-time, if need be.

But all of these possibilities also raise questions about privacy and this is in direct contradiction to the reason why blockchain and bitcoins became popular in the first place. Several industry experts have expressed concerns that a technology that can provide a record of every transaction can be exploited for everything “from customer profiling to other less benign reasons”.

From another perspective however, blockchains greatly improve transparency in data analytics. Unlike previous algorithms, the blockchain design rejects any input that it can’t verify and is deemed suspicious. As a result, analysts in industries such as Retail only deal with data that is completely transparent. In other words, the customer behavior patterns that blockchain systems identify are likely to be a whole lot more accurate than it is today.

Uncovering Transactional Data

The data within the blockchain is predicted to be worth trillions of dollars as it continues to make its way into banking, micropayments, remittances, and other financial services. In fact, the blockchain ledger could be worth up to 20% of the total big data market by 2030, producing up to $100 billion in annual revenue. To put this into perspective, this potential revenue surpasses that of what Visa, Mastercard, and PayPal currently generate combined.Big data analytics will be crucial in tracking these activities and helping organizations using the blockchain make more informed decisions.

Data intelligence services are emerging to help financial institutions, governments, and all kinds of organizations delve into who they might be interacting with on the blockchain and uncover “hidden” patterns.

Uncovering Social Data

As the popularity of bitcoin advanced in 2014 and 2015, the virtual currency began to fluctuate heavily as a result of real-world events and the general public’s sentiment about the technology. These fluctuations are proof that the virtual currency has several characteristics that make it ideal for social data predictions.

According to Rick Burgess of Freshminds: “Using social data to predict consumer behavior is nothing new, and many traders have been looking to include social metrics into their trading algorithms. However, because there are so many factors involved in pricing most financial instruments, it can be extremely difficult to predict how markets will change.”

Fortunately, bitcoin users and social media users tend to align quite well, and it may be beneficial to use them both for data analysis, as he further explains:

  • Bitcoin users tend to be in the same demographic as social media users, and so their attitudes, opinions, and sentiment towards bitcoin are well documented.
  • The value of bitcoins and other cryptocurrencies are determined almost solely by market demand because the number of coins on the market is predictable and are not tied to any physical goods.
  • Bitcoins are predominantly traded by individuals rather than large institutions.
  • Events that affect Bitcoin’s value are disseminated first and foremost on social media.

Data analysts are now mining social data for insights into key cryptocurrency trends. This, in turn, helps organizations uncover powerful demographic information and link bitcoin’s performance to world events.

Uncovering New Forms of Data Monetization

According to Bill Schmarzo, CTO of Dell EMC Services, blockchain technology also “has the potential to democratize the sharing and monetization of data and analytics by removing the middleman from facilitating transactions.” In the business world, this gives consumers stronger negotiating powers over companies. It allows consumers to control who has access to their data through the blockchain. They could then demand pricing discounts in exchange for revealing data on their personal consumptions of a company’s product or service.

Schmarzo also explains how the blockchain may lead to new forms of data monetization because it has the following big data ramifications:

  • All parties involved in a transaction have access to the same data. This accelerates data acquisition, sharing, the quality of data and data analytics.
  • A detailed register of all transactions is kept in a single “file” or blockchain. This provides a complete overview of a transaction from start to finish, eliminating the needs for multiple systems.
  • Individuals can manage and control their personal data without the need for a third-party intermediary or centralized repository.

Ultimately, the blockchain could become a key enabler of data monetization by creating new marketplaces where companies and individuals can share, sell, and offer their data and analytical insights directly with each other.

Spearheaded by the large scale adoption of bitcoin, blockchain technologies are gaining ground throughout the business and financial worlds. The fast and secure transactions it facilitates could potentially revolutionize traditional data systems. According to a survey by KPMG and Forrester Consulting, one-third of decision makers trust their company’s data. But with blockchain technologies, this trust can be considerably strengthened, and real applications will become much more commonplace.

Original. Reposted with permission.

Bio: Abhinav Venkat is associate VP – consulting at Noah Data.

Related:

Blockchain and Distributed Ledger Technology

Blockchain explained from an enterprise perspective
Blockchain has the potential to revolutionize how businesses operate.What is blockchain technology?

The simplest blockchain definition? A reliable, difficult-to-hack record of transactions – and of who owns what. Blockchain is based on distributed ledger technology, which securely records information across a peer-to-peer network. Although it was originally created for trading Bitcoin, blockchain’s potential reaches far beyond cryptocurrency. Blockchain ledgers can include land titles, loans, identities, logistics manifests – almost anything of value. The technology is still new, but the potential impact it can have on business is exciting, and immense.

What is distributed ledger technology?

A distributed ledger is a database of transactions that is shared and synchronized across multiple computers and locations – without centralized control. Each party owns an identical copy of the record, which is automatically updated as soon as any additions are made.

How does blockchain work?

A blockchain records data across a peer-to-peer network. Every participant can see the data and verify or reject it using consensus algorithms. Approved data is entered into the ledger as a collection of “blocks” and stored in a chronological “chain” that cannot be altered.

What are smart contracts?

Smart contracts – self-executing agreements based on blockchain technology – automatically trigger actions or payments once conditions are met. In the near future, they will use real-time information, such as asset GPS data, to trigger an event, such as a transfer of ownership and funds.

4 types of blockchain networks

Of the four ways to establish a blockchain network – currently, consortium is the most accepted model for business.

Consortium blockchains

In a consortium blockchain, the consensus process is controlled by a pre-selected group – a group of corporations, for example. The right to read the blockchain and submit transactions to it may be public or restricted to participants. Consortium blockchains are considered to be “permissioned blockchains” and are best suited for use in business.

Semi-private Blockchains

Semi-private Blockchains are run by a single company that grants access to any user who satisfies pre-established criteria. Although not truly decentralized, this type of permissioned blockchain is appealing for business-to-business use cases and government applications.

Private Blockchains

Private Blockchains are controlled by a single organization that determines who can read it, submit transactions to it, and participate in the consensus process. Since they are 100% centralized, private blockchains are useful as sandbox environments, but not for actual production.

Public blockchains

Anyone can read a public blockchain, send transactions to it, or participate in the consensus process. They are considered to be “permissionless.” Every transaction is public, and users can remain anonymous. Bitcoin and Ethereum are prominent examples of public blockchains.

The age of blockchain transactions

Fewer Intermediaries

Blockchain is a true peer-to-peer network that will reduce reliance on some types of third-party intermediaries – like banks, lawyers, and brokers.

Faster Processes

Blockchain can speed up process execution in multi-party scenarios – and allow for faster transactions that aren’t limited by office hours.

Transparency

Information in blockchains is viewable by all participants and cannot be altered. This will reduce risk and fraud, and create trust.

ROI

Distributed ledgers will provide quick ROI by helping businesses create leaner, more efficient, and more profitable processes.

Security

The distributed and encrypted nature of blockchain mean it will be difficult to hack. This shows promise for business and IoT security.

Automation

Blockchain is programmable – which will make it possible to automatically trigger actions, events, and payments once conditions are met.

Blockchain shows promise in many different industries and lines of business. Here are three key use cases:

Supply Chain

Blockchain technology has the potential to improve transparency and accountability across the supply chain. Applications are already being used to track and trace materials back to the source, prove authenticity and origin, get ahead of recalls, and accelerate the flow of goods.

Public Sector

The public sector is looking at the potential of blockchain to serve as the official registry for government and citizen-owned assets like buildings, houses, vehicles, and patents. Blockchains could also facilitate voting, reduce fraud, and improve back-office functions like purchasing.

Utilities

Blockchain software solutions are being tested for a wide range of applications in the utilities industry: peer-to-peer solar energy sales between neighbors, energy trading among utility conglomerates, automated billing for autonomous electric vehicle charging stations, and more.

How SAP is bringing blockchain to the enterprise

At SAP, we see blockchain as a promising way to simplify complex multi-party processes and create trust among participants. We’re using our expertise in 25 industries and across all lines of business to actively explore blockchain technology, and help you capitalize on its potential. SAP Leonardo, our digital innovation system, includes some early-stage blockchain capabilities, and integrates them with other breakthrough technologies – such as the IoT and machine learning.

Embedded in the SAP Cloud Platform, our blockchain-as-a-service (BaaS) pilot is giving registered customers an easy way to experiment with the technology. By eliminating the need for a large upfront capital investment, BaaS is perhaps the lowest-risk gateway to enterprise blockchain adoption.

  • Experiment with blockchain to see how it could benefit your business
  • Use open standards to create consortium and private blockchain networks
  • Prototype, test, and build customized blockchain applications and smart contracts

Blockchain and IoT co-innovation for the digital supply chain

SAP is co-innovating with our customers and partners to explore high-value blockchain functionality for some of our existing products. We’re currently investigating new capabilities for multiple solutions across our IoT and supply chain portfolio, including: SAP Asset Intelligence Network, SAP Distributed Manufacturing, SAP Transportation Management, and SAP Global Track and Trace.

Get the facts

10%
of global GDP will be stored in blockchain by 2027.
~ World Economic Forum
of major banks in NA and Europe are exploring blockchain Technology.
~ Accenture
90%

83%

of life science leaders expect blockchain will be adopted within five years.

~ The Pistoia Alliance

Getting started with blockchain technology

Certain sectors will be heavily impacted by blockchain in the near future – and forward-looking companies are already getting ahead of the curve.

Blockchain in Real Estate: You Can Now Buy Fraction of House

https://cointelegraph.com/news/blockchain-in-real-estate-you-can-now-buy-fraction-of-house

The power of the Ethereum Blockchain continues to permeate traditional models of business and investment with Real Estate the latest target. Through crowdfunding and smart contracts, REAL believes that the inefficacy and illiquidity of this traditional institution of investment potential can be opened up.

The idea of investing in real estate used to involve forking out huge sums of money to buy property, in a person’s locality, with the hopes that it earns a profit over running costs. However, crowdfunding, and even more recently, Blockchain technology, is disrupting this model.

Buy a fraction of a house

There is a lot of promise that comes with investing in property. Rent, as well as the appreciation of property, are consistent and reliable streams of revenue and return, however, breaking into the property market is not a game for all.

Recent ideas, such as crowdfunding have simplified many aspects of traditional investments and business, but they still have their problems. Crowdfunding involves the coming together of multiple parties, in an agreement of trust, to effect an outcome that usually has to be regulated by a third-party.

In the case of real estate crowdfunding, middlemen have to be employed to sustain an agreement between multiple parties so that the proper dividends are received and the benefits are equally and fairly distributed. Cross border investments also come with their own issues.

Breaking down the walls, with Ether

REAL’s belief is that their use of Blockchain, Ethereum smart contracts, and digital currencies, or their own tokens, can alleviate these problems.  REAL tokens will be used to invest in properties on their crowdfunding platform.

While some of the traditional real estate investment issues are being solved through crowdfunding, a new world of cross border and trustless investment, can be opened with Blockchain technology.

Through REAL’s platform, tangible real estate can be invested in fractionally and with digital currencies. By using the Ethereum network, smart contracts do the work.

In an Ethereum environment, the need for regulatory bodies and middlemen would seem to fall away, and with them the fees and problems surrounding potential global investment. By investing on an Ethereum Blockchain REAL propose that rental dividends, agreements between investors, and other intricate aspects of property investment – on a crowdfunded level – will be executed fairly and transparently.

Full of liquid

Disrupting traditional markets also comes with ease of accessibility and REAL claim that because of the self-contained Blockchain system, and the lack of external parties governing the flow of assets and control of parties in the crowdfunded investment, there will be high liquidity in an usually illiquid game.

As with any cryptocurrency token the growth or decline of the value of REAL’s token can be profited off, as well as the dividends returned from the true investment. Their platform aims to allow digital, crowdfunding investors the chance to turn their tokens into Ethereum, or other digital currencies, with ease.

Disclaimer. Cointelegraph does not endorse any content or product on this page. While we aim at providing you all important information that we could obtain, readers should do their own research before taking any actions related to the company and carry full responsibility for their decisions, nor this article can be considered as an investment advice.

Real estate Title transfers in Blockchain

Permissionless Real Estate Title Transfers on the Bitcoin Blockchain in the USA! – Cook County Blockchain Pilot Program Report

  • Published on Published on June 28, 2017

Ragnar Lifthrasir, MSRED

  1. Can you legally transfer ownership of real estate on the bitcoin blockchain?
  2. Can a blockchain real estate title transfer be recorded in the government public records?
  3. Can you do both without needing special permission or partnership with the county government?

The answers are yes, yes, and yes.

We know this because my startup velox.RE, recently completed an eight month pilot program with Chicago’s Cook County Recorder of Deeds to test transferring ownership of real estate on THE blockchain and subsequent recording of that conveyance into the public record.

If you prefer to watch rather than read, I briefly summarize the pilot program in this video.

Consensus

The pilot program was a collaborative, volunteer effort, with talented individuals and organizations who represented public and private stakeholders. Besides velox.RE, these participants included:

  • Lewis Cohen, a partner at international law firm Hogan Lovells
  • Chuck Thompson, Founder of Blockchain Consulting and legal advisor to velox.RE
  • Leaders from The International Blockchain Real Estate Association (IBREA)
  • Cook County Recorder of Deeds (CCRD)
  • Two Chicago-based pro bono counsel from law firm Goldberg Kohn represented CCRD
  • Others from title insurance, notaries public, and technology lent their expertise for specific issues

Accomplishments

After months of research, discussion, and software versions, the pilot program produced the following accomplishments:

A) velox.RE successfully completed several tests of a Bitcoin blockchain real estate conveyance with a Chicago property owner. This met the all the legal, procedural, and software requirements agreed upon by the pilot program participants.

While a company reported that it created a token to stand for real estate and sent it to another in 2016, the velox.RE pilot program will allow velox.RE to perform the first known legal and paperless conveyance, where the actual exchange of a token was done in a manner that the grantor and grantee expect to qualify as a legal conveyance. Furthermore, velox.RE, and others who follow can perform blockchain conveyances in all 50 US states.

B) Cook County Recorder of Deeds approved the legal instrument that velox.RE and its user — property owner could use to publicly record a blockchain conveyance.

Conclusions

The pilot program produced the following conclusions:

  1. Property owners can transfer title to their real estate with Bitcoin colored coins right now. (Permission or participation from a Recorder’s Office is not needed since they aren’t involved in property conveyances). For the blockchain conveyance to be legally valid, it must follow existing legal requirements and certain technological specifications.
  2. Property owners can record their blockchain conveyance into the public record right now. Indeed, as long as the document is properly formatted, the Recorder’s Office must, by law, record it.

How is this different from other blockchain pilot programs?

There are two other notable blockchain real estate pilot programs, one in the Republic of Georgia and one in Sweden. Both have respected teams and have accomplished their goals to date. Georgia and Sweden use a title registry system, where a property changes ownership by a government official updating the land ledger to reflect the new owner. The government performs the conveyance between the parties.

In contrast, (most of) the US uses the deed registration system where the seller transfers ownership of the property directly to the buyer using a deed. In a separate, optional step, the buyer may choose to publish this deed in a county clerk / recorder’s office.

How do the Swedish and Republic of Georgia pilot programs differ from ours?

Technology. Both European programs used a private blockchain. We used the Bitcoin blockchain.

Function. The Republic of Georgia’s program was a land registry. Property did not change ownership on a blockchain. But rather, existing records were “backed up” on a blockchain. The Swedish program focused on using a smart contract to make a more seamless transactional process. In both cases the government ran some sort of blockchain technology.

The function of our pilot program was to transfer ownership of a property peer to peer, (between buyer and seller). We tested using a blockchain deed to replace a paper deed. We also tested how a blockchain conveyance could then be recorded into the public government record. In both cases, the government did not run any blockchain software, but rather helped craft the legal and procedural steps.

Why did we use Bitcoin (blockchain) specifically?

Bitcoin is the most secure and robust decentralized value transfer network. It has been running for eight years with no downtime, has more processing power dedicated to it than the largest supercomputer in the world and has a simple scripting language with the smallest attack vector. Other blockchains like Ethereum are interesting experiments, but they do not match Bitcoin in terms of reliability, security and decentralization. Financial institutions that value reliability, security and decentralization for digital assets are likely going to want solutions on top of Bitcoin.

— Adam Back, Inventor of Hashcash & CEO of Blockstream. Source

Why Use Blockchain For This?

What problem were we trying to solve with using the blockchain? Primarily fraud, asset liquidity, and transactional costs and friction.

The real estate industry faces multiple pain points caused by fragmentation and centralization. Technology is fragmented across different protocols. People are fragmented across different roles. Technology is centralized in proprietary and non-interoperable software applications. Data is centralized by third parties. In the upcoming velox.RE white paper I go into exhaustive detail on our technology and why it solves the major problems in real estate.

This fragmentation and centralization produces the following ten pain points:

  1. Illiquid assets / cumbersome title transfer
  2. Slow price discovery
  3. Expensive Due diligence
  4. Incomplete and insecure property data
  5. High transaction costs
  6. Unnecessary third parties
  7. Non-interoperable and proprietary software
  8. Legal inconsistencies
  9. Fraud
  10. Haphazard mortgage tracking

The Cook County Recorder of Deeds (CCRD) faces a lot of fraud. In explaining their “Deed Check” service, the CCRD website says,

Even though the deed was conveyed to you when you purchased the home, and was likely warranted to be free and clear of outstanding liens or claims at that time, there is nothing to prevent a scammer from filing a false claim on top of your legitimate deed after closing and finalization of the conveyance.

This is because County Recorders are not authorized by law to verify the legal claims made in documents.

The FBI has called mortgage fraud one of the fastest growing white collar crimes. In the US, deeds are filed in county recorders offices, who cannot police fraudulent documents.

County recorders are required to record any document that meets legal standards. We are not authorized by law to verify the legal claims made in documents. Unlike a credit report, property owners cannot “Freeze” their chain of title to prevent someone from recording a lien or document against a property. Most fraudulent recordings happen as an abuse of our open recording system.

— Karen Yarbrough, Cook County Recorder of Deeds – Source

Fraud isn’t limited to submitting false documents to the recorder’s office. Even in the US, government fraud still occurs. For example, on January 20, 2016 a clerk in Chicago’s Cook County plead guilty to accepting a cash bribe in exchange for preparing a back-dated deed on an Oak Park home and agreeing to record it with her office.

The Blockchain Deed 

velox.RE digitizes real estate assets by creating a Bitcoin token (colored coin) to represent the asset. To transfer the asset you transfer the colored coin on the Bitcoin network. The Bitcoin blockchain is a public ledger of the transfer. The colored coin functions as a digital deed.

In property law, a title is a bundle of rights in a piece of property in which a party may own either a legal interest or equitable interest. The rights in the bundle may be separated and held by different parties. It may also refer to a formal document, such as a deed, that serves as evidence of ownership.” –Wikipedia

To illustrate how colored coins function as a deed in the US, I will summarize the conveyance process. It’s crucial to remember that transferring title involves two separate steps in this system.

Step 1: Conveyance

In the United States, a deed conveys (Transfers) the title to real estate. The government does not participate in the transfer, it is performed directly between the seller and buyer. And no third party is required to create the deed. The property is transferred when the seller signs the deed and hands it or sends it to the buyer.

 

In the example below, Glenn Tuan sold a property in San Jose, California to Shahmirzad Properties, LLC.

Paper deeds are easy to counterfeit using Photoshop. By creating a deed to a property they don’t own, fraudsters can:

  1. Take out a loan
  2. Sell, transfer, or rent the property

Paper currency is difficult, though not impossible, to counterfeit, so printing a deed on a dollar instead of a regular paper could reduce fraud. Hypothetically, the most effective way for governments to reduce fraud right now is to print deeds on their currency.

But it’s illegal to deface fiat currency. One can, however, put a deed onto cryptocurrency, in our case, bitcoin. This is basically what Colored Coin does. But instead of a paper dollar bill, title information is put onto a fraction of a bitcoin.

Making a digital currency uncounterfeitable was one of Satoshi Nakamoto’s biggest breakthroughs in creating bitcoin. Thus using bitcoin as the conveyancing medium instead of paper vastly reduces the ability to create fraudulent paper deeds.

The colored coin is the deed. It is a Bitcoin token that digitally represents the title to the property. To transfer ownership of the property, the seller sends the colored coin from her bitcoin wallet to the property buyer’s bitcoin wallet via a bitcoin transaction.

Step 2: Public Record

Going back to our example, once Shahmirzad LLC has the deed, it owns whatever title to the property was conveyed in that deed.

To protect the grantee’s interest in the property, it is common practice (but not required by law in most states) to put the deed into the government public record. This is performed at the county recorder’s office and is known as “recording” the deed. In some counties, the deed can be submitted electronically for recordation.

Shahmirzad LLC will record the deed to protect his interest in the property by, for example, preventing Tuan from claiming that he still owns the property and selling the property twice. If Shahmirzad LLC delayed a week in recording the deed, and during that period Tuan made another transfer of the same property to someone else (call them “BFP”) who did not have knowledge that Shahmirzad LLC had previously purchased the property, and BFP recorded the deed before Shahmirzad LLC, BFP would have superior rights to Shahmirzad LLC, even though it is the actual title holder.

Before buying a property, a purchaser checks the public record to verify that the person selling the property is the last recorded owner and that there are no gaps (“breaks”) in the history. The history of all transfers of a property from one owner to the next is known as the “chain of title”.

In this real estate system, the conveyance and recording are two separate steps, performed at different times, with different entities, and different technologies. With Bitcoin however, the two steps are combined into one step, occur at the same time, with the same entities, and same technology. The ownership change is automatically, immutably recorded on a public record — the Bitcoin blockchain.

The advantage given by using the blockchain as the backbone for such asset manipulation is that one can rely on the blockchain’s transparency, immutability, ease of transfer and non-counterfeitability to transfer and trade such digital tokens with unprecedented security and ease.

Colored Coins GitHub

While originally designed to be a currency, Bitcoin supports a limited scripting language that can be used to store metadata on the blockchain. Colored Coins is a concept that allows attaching metadata to Bitcoin transactions and leveraging the Bitcoin infrastructure for issuing and trading immutable digital assets that can represent real world value. The value of such digital assets is tied to a real-world promise by the asset issuers that they are willing to redeem those digital tokens for something of value in the real world.

Colored Coins GitHub

The full text and data about the asset (such as address and name of owner) are not contained in the bitcoin transaction. There isn’t enough storage space. Instead, all of the information is kept off chain, in the data storage system of Colored Coin. This data is hashed and the resulting hash value is stored as metadata in the OP_RETURN field of the bitcoin transaction.

Let’s return to the pilot program and how we adopted our technology to fit the legal requirements for a property conveyance.

Making Paper Deeds Digital

We had five attorneys from four different law firms, several government officials, two title insurance company presidents plus other real estate professionals, research, discuss, and test how to make a blockchain deed conform to existing laws. After more than half a year of work, we all agreed on the following document that summarizes the basic principles.

In the spirit of open source software and the collaborative nature of the International Blockchain Real Estate Association, velox.RE has decided to share our “Blockchain Deed Protocol” with everyone. We hope other startups, property owners, government officials, and the wider industry uses it as template.

Once the pilot program participants reached consensus on the existing requirements and principles of a legal deed transfer, velox.RE designed and built the software to implement it on the bitcoin blockchain.

The pilot program participants unanimously agreed on this protocol. So we then moved forward with implementing and testing it on the velox.RE software.

We had a Chicago commercial real estate professional who wanted to transfer a property. We successfully tested the velox.RE software with him in person, on two different occasions, and with Trezor hardware wallet integration.

We concluded the pilot program with velox.RE’s successful software tests.

What’s Next

At velox.RE we are continuing to develop our comprehensive real estate platform and build our team. Title is just one of our applications. Our focus isn’t on governments, but on property owners and operators.

Some of the pilot program participants will be presenting at the International Blockchain Real Estate Association’s annual conference on October 10th, in conjunction with NYC RE Tech Week. I hope you’ll join us.