5.64 million existing homes were sold in 2020, An additional 822k new homes were sold that year, according to data from the National Association of REALTORS®. That is roughly 6.4 million million on the year, or 17.5k transactions per day.
Minimal trust systems are the environment in which smart contracts can thrive
Those 17.5k transactions occurred across a vast array of data platforms, throughout the life cycle of the property listing. As we have noted before, globally, more than 500 billion dollars is ‘in stasis’ at any given time simply due to the lack of ‘minimal trust systems’. So we basically have a global financial system that relies on baked in inefficiencies to create a minimal trust environment.
Minimal trust systems are the environment in which smart contracts can thrive. What is a smart contract? Great question. A smart contract is a software program that has been deployed to the ethereum blockchain.It acts almost like a vending machine for web3 functionality. You visit, Sign In With Etherum, and plug your token into the system, press the buttons, and expect your product to be delivered.
And that was what we had to work with, so we should salute where it brought us. We relied on ‘proof of work’ essentially, for valuable transfers, because there was no way to proceed otherwise.
What should pique our interests now is the sort of scaffolding we are seeing being built for the web3 ecosystem, like the Ethereum Identity Space (SIWE + ENS). It is now starting to make sense to ask the extent to which we can leverage smart contracts to erase some of these inefficiencies.
As we said, smart contracts are like vending machinesU – Nick Szabo came up with this brilliant analogy in his landmark paper describing smart contracts for the first time (from the last century mind you!) right now, the vending machine can take 30 days to deliver your snickers bar to your waiting hands. It needs that delay to ensure all commitments are met, all parties are satisfied. But this is what smart contracts can do so well… We just need to find the right market fit, with the right aligned incentives, and we can unlock massive efficiencies.
There are hundreds of examples like this globally, where we can literally improve the global financial economy simply by getting the blood pumping faster. These are just some of the ideas we discuss on our podcast and in our blog, as we work to bring practical blockchain solutions to real estate.