I just sold a property using BitBay’s blockchain smart-contracts
I just sold a 5-acre lot in San Bernardino County, CA, to a buyer in Norway, using cryptocurrency and BitBay's trustless smart contracts. The last year and a half has been spent putting together a land business (based on @sethwilliams model), which I am now integrating with blockchain technology.
First, for those who are new to blockchain tech and cryptocurrency:
Smart Contract: A smart contract is a computer protocol intended to facilitate, verify, or enforce the negotiation or performance of a contract.
Cryptocurrency: is a digital asset designed to work as a medium of exchange using cryptography to secure the transactions and to control the creation of additional units of the currency.
Blockchain: A blockchain is a digitized, decentralized, public ledger of all cryptocurrency transactions. Constantly growing as ‘completed’ blocks (the most recent transactions) are recorded and added to it in chronological order, it allows market participants to keep track of digital currency transactions without central recordkeeping. Each node (a computer connected to the network) gets a copy of the blockchain, which is downloaded automatically.
note: These definitions are very condensed, solely for the purpose of this post. I could write 10 pages on each of them and it would only scratch the surface.
So what is BitBay you might ask? From their website: “Bitbay is a working real-world cryptocurrency powering a fully-functional decentralized marketplace that allows you to buy and sell goods and services easily, securely, and anonymously.”
For more information, check out their website at: https://bitbay.market/
I first discovered BitBay markets while perusing some forums on cryptocurrency investing, and after reading several recommendations, decided to give it a look. After checking out their project, I decided to buy come BAY currency, thinking I would hold it long term it and nothing more. However, upon realizing that their software had a built in wallet, I went a bit further to download it in order to securely store the digital coins. In all honesty, my first impression of the BitBay software was fairly unimpressive. The general feel of the user interface seemed a little outdated, and had a strong “Windows ‘95” feel to it. However, after watching a few tutorial videos (which I highly recommend) I quickly realized that this is a very powerful tool, which can be used for almost any type of transaction in the world. David Zimbeck, the developer and his team have spent almost 100% of their focus on the function and security of the software, before making it visually appealing. Function before fashion, I absolutely love it.
(A brand new, more visually appealing user interface is going to be launched Q1, 2018)
After a few days had passed, I was really curious to see the software in action. I wanted to see if these “trustless smart contracts” were actually a legitimate process for business, and the only way to do that was to list something on their decentralized marketplace. In order to truly test this out, I needed to sell something large, something that would normally require a sizeable amount of trust; an item that typically included middlemen, central authorities, and high fees. It so happened that there was a 5-acre vacant lot I needed to sell for my land business, which I had started a year and a half ago.
That afternoon, I sat down with a cup of tea at my desk, thinking that creating this listing would take the rest of the day. However after few clicks, I had my property listing up on the decentralized marketplace. The most time consuming part for me was deciding how to custom tailor the double deposit escrow (DDE). The way this trustless escrow system works is that both buyer and seller deposit a set amount of money into an encrypted account. If either party decides to cheat one another, the deposits are destroyed, and both lose money. This conveniently prevents fraud, as there is no financial or physical gain for dishonesty. Additionally, this also completely eliminates the need for a costly third-party escrow service. The double deposit escrow can be set up a number of different ways, depending on the seller’s risk tolerance and value of the item being sold.
After a few days of having the land listed on the marketplace, I opened my computer to find that someone had accepted my smart contract. Not only that, but it was a buyer located on the other side of the planet, in Norway! My first thought was “Is this even legal?” However, what really found surprisingly surreal was the feeling of trust that came with this contract acceptance. I had comfort knowing that the deal would be followed through to completion. (note: BitBay offers automatic price tracking, so if the currency value changes before a contract is accepted, you will still receive the equivalent amount for the deal. You can also use fiat (USD) for the purchase price and BAY for the deposit to ensure minimal price change upon contract completion. The rolling peg will also create an incentive to use BAY instead of fiat.)
Once I confirmed the legality of foreign citizens purchasing real estate in the U.S., I mailed the deed and paperwork out to the buyer. This was the slowest part of the transaction. The county that this property is located in requires a wet signature on all recorded documents, so an electronic signature was out of the picture. Once the buyer signed the documents, he then had to send them back to the U.S. for recording. Someday, when the counties update their policy, e-signatures will make the process incredibly faster. To take it one step further, imagine if the counties could integrate their records onto the blockchain… Then an accepted smart contract on BitBay could seamlessly be updated in the county records. I digress. Once the county received and recorded the deed, the buyer then sent the payment of BAY currency to my BitBay wallet address within the client. At that time we both received our deposits back, and the transaction was complete. (the next step would be to convert the payment of BAY into USD.)
Over all, this transaction was about as smooth as I could have ever hoped. With the custom smart contract templates, the possibilities are litteraly endless. One could easily set up tennant/landlord agreements, contractor agreements, owner financing, etc. The only frustration I experienced was where the ultra-efficiency of BitBay met the clumsiness of the county’s recording system. I can also see how there would be other roadblocks with various real estate industry middlemen (i.e. title companies) that have not adapted to this advancement in technology. I look forward to seeing all components of real estate transactions placed onto the blockchain in the future. One other aspect that I could see posing an issue is government regulation. The US federal government currently classifies cryptocurrency as property, requiring citizens to pay capital gains taxes on both cryptocurrency and real estate. In my case, if I were to convert the profits from my land sale to US Dollars, I could be potentially taxed (15-20%) for both the sale of the land and the “conversion of currencies”. If this changes, transactions like this will be much simpler and more cost effective to complete. Until then, I will continue to long term hold my Bay currency and use this amazing platform called BitBay.
In a nutshell, here are several of the many features that make BitBay smart it so unique:
Double Deposit Escrow – both parties have to put money in the deal, and if anyone backs out, both parties lose. This creates a synergistic relationship between both sides, and automates enforceability of the contract.
Dynamic Rolling Peg - The automated control of supply and demand. This keeps the currency stable, so users don’t have to worry about extreme volatility during transactions. For a better understanding check this out. (This will be implemented in Q2, 2018)
Built-in wallet to the client – This is a very secure wallet, which interacts perfectly with the marketplace. There is the option for staking as well. (Web wallet is soon to be released)
– This is huge, because it allows you to easily create set your own transaction. You can use literally any currency, or none at all. You can barter…you can trade…all safely and securely knowing that the other party will fulfill their end of the bargain. The possibilities are endless.