Title companies saw a surge in 2020, but one economist predicts they could soon become obsolete if blockchain finds its way into the mortgage industry.
Title companies are seeing more business than ever before, but could that end soon? An economist thinks so.
Title Award Volume billowed According to the American Land Title Association’s latest market share analysis, the industry generated more than 20 percent of title insurance premiums of $ 19.2 billion in 2020.
Despite this surge in activity, one economist said title companies may be out of date as blockchain technology becomes more popular.
“Prediction: Blockchain and NFTs will make title companies obsolete,” Redfin chief economist Daryl Fairweather wrote in a Twitter thread. “The title company market is currently over $ 16 billion. The title company’s role is to ensure that the home seller actually owns the home and has the right to sell it (an NFT could take care of it). “
Prediction: Blockchain and NFTs Eliminate the Need for Title Companies. The title company market is currently over $ 16 billion. 1/4
– Daryl Fairweather 📊 (@FairweatherPhD) April 13, 2021
“Homebuyers buy homeowner insurance to protect the lender in the event that someone comes by and claims ownership of the home (you wouldn’t need to do that if the home was clearly verified through an NFT),” Fairweather said. “Title companies keep escrow accounts so that serious money is kept safe until the house is sold. You wouldn’t need that if serious money was being recorded on a blockchain. “
Blockchain, a subset of Distributed Ledger Technology, or DLT, is essentially a method of storing and tracking information across a series of blocks that together form a chain of blocks and a ledger, blockchain expert and CEO of Symmetry Blockchain Advisors, Debbie Hoffman, are similar wrote. This ledger is not stored on a server, but in a decentralized database that contains a large number of computers or “nodes”.
One of the advantages of such a decentralized database is that it sets a higher standard for a cyberattack, as more than 51 percent of computers would have to be hacked at the same time for such an attack to take place. In addition, the decentralized storage of information enables peer-to-peer business. This means that information can be obtained more directly and may not require an intermediary or intermediary of payments or data.
A non-fungible token (NFT) is a unit of data that is stored in a blockchain and that certifies a digital asset as unique and therefore not exchangeable. NFTs can be used to represent items such as photos, videos, audio, and other types of digital files.
And many believe that blockchain will take power in 2021. Sagent Lending Technologies claims it is blockchain no longer “A solution that looks for a problem” in real estate finance that can offset 117 basis points of costs from creation to securitization.
If blockchain makes big waves in 2021 and beyond, title companies could become irrelevant or have to shift their focus or business model in the future.