Blockchain may change the game

To ensure Shrosbree’s listing reflected the value he wanted for his property, for example, his real estate agent Brett Starke had to change the Bitcoin price on MLS every day, with Shrosbree signing off on the moves. A separate condition on the sale was that the bitcoin payment had to be equivalent to the value in Canadian dollars on the day the sale closed.

“It’s very hard for a price denominated in Bitcoin to be sticky for long periods of time,” said Stephen McKeon, a professor of finance at the University of Oregon. “It’s very volatile and presumably the cost will be in whatever the native currency is. That’s the No. 1 problem.”

Another obvious problem is finding a buyer comfortable with a Bitcoin arrangement, McKeon adds. Cryptocurrencies aren’t widely understood or held by mainstream consumers.

And there remain concerns about criminal activities. The Real Estate Councils of B.C. and Ontario have noted cryptocurrencies cannot be held in trust and have advised buyers using them to seek legal advice.

But for all the fear and hype, experts say the real opportunity for innovation in the real estate industry rests not with digital coins but with the technology: blockchains. These decentralized public ledgers verify and record transactions across many computers. Supporters say they have the potential to make property transactions faster, less expensive and more resistant — though not immune — to fraud.

“Buying a property in Bitcoin is equivalent to buying it in one fiat-backed currency and switching it to another,” said Simone Brunozzi of San Francisco-based Fabrica.city, which is developing a software platform for property transactions. “Blockchain is a global registry. When you record a transaction, it’s there forever. It’s a trusted public record.” The ability of blockchains to create transparent, secure records of transaction could prove immediately disruptive, said Brunozzi.

Though much development still remains, Shrosbree — a former derivatives trader now working on an insurance business that accepts bitcoin — believes a seamless transaction between buyer and seller could happen sooner than many think.

The sale of his Mississauga condo closes in April. He plans to list the next two properties soon. “We’re hoping the second and third sales will truly be a 100-percent fiat-free transaction,” he said.