Comment by lbwtaylor | Hacker News Reader

Comment by lbwtaylor | Hacker News Reader

Parent Full thread

>>The analogy I like to use is what's harder to buy a $1 million house or $1 million of Microsoft stock

It's interesting, both have registries, so why is one harder? Is it because the registry is better? No, it's because real property transactions are more complex:

- What condition will the property be delivered in and when? - What happens if the condition is not as specified? - what personal property is included in the transaction? What condition is it in? - Are there disputes over the property lines? - Are there easements? How do they work? - Are there third party consents needed? How do those work? - Will the seller vacate immediately, or will they rent back? - How will you pay for the property and when? - What happens if you don't pay? How much is the deposit and what are the terms of the deposit?

The complexity of the transaction derives from the complexity of the subject matter. Sure, if you could standardize those items, you could make property more like stocks, and people are trying to do that, which so far limited success. But for the average person, this is a huge investment, and they will want to spend time and create a transaction that works for them.

Almost none of the complexities related to the transfer of real property relate to issues with the county registry. Sure registries could improve, but very little would change.

One of the expenses is paying for title insurance. Sure in some sense a perfect ledger would obviate the need for that insurance. But given there seems to be more fraud in blockchain than in normal US real estate transactions, not sure the insurance price goes down, rather than up...

Let's also not forget the whole deal with financing.

When you buy a house, for $1 million or $50,000, the normal case being described in yours and the parent post is that you are buying a house on margin while using the house itself as collateral for the loan.

If you show up at a house that is for sale and ready to be sold with a million dollars in cash -- well, a million dollars in easily-authenticated cash equivalent -- and ask to buy the house as-is, no conditions or concerns on your part, you can make a deal happen markedly faster. Not microsecond fast, because why, and the sellers might balk at such a weird transaction or shop around to see if they can get another seller at a higher price, but once you take financing and any sort of buyer-protection out of the equation it basically comes down to registering the sale with the local registry.

And having a lawyer or notary go over every line of the sale contract to ensure that you understand it. Real property comes with real responsibility, far beyond that of the financial realm.

> the sellers might balk at such a weird transaction

Over there, buying a house without taking out a mortgage does not count as "weird": it's not terribly common, but happens often enough to not be considered weird. After all, if you have 100% of the house price on hands, there is not much reason to take a mortgage with 20% down payment and then immediately closing the rest of 80%, is there?

Buying a house without financing isn't weird (even if it is uncommon). Trying to buy a house as quickly as possible with as little due diligence or negotiation as possible, is.

Exactly.

Microsoft stock is basically fungible whereas houses and most other real-world property very much are not.

But for houses, you could use an NFT to represent digital ownership of the underlying physical asset.

The problem is the very definition of "the underlying physical asset".

The state would have to legislatively enact the fact the their land registry database is now an NFT based blockchain.

Sure, I was taking that for granted more or less.

But that doesn't mean anyone will buy a house by browsing some site and buying an NFT, even if this were prefectului legally worked out.

And that is because a house and piece of land are complex real world objects that don't live on-chain, and can be arbitrarily different from when the NFT was minted. Perhaps there was flooding and the house is now damaged. Perhaps there is some insect infestation. Perhaps the land is in the process of being expropriate for highway construction. Perhaps a nearby high-rise is obscuring all the sunlight and the house is to dark for your tastes.

The complexity in real-estate transactions comes from appraising all of these sorts of things, not from the need of keeping the lands registry up to date. To buy a house, you need to have an expert appraise it's status. You also need a contract that gives you some protection from hudden huge issues that your expert may have missed. These things take the majority of the time and effprt, and NFTs do nothing to help with them.

I'm honestly not sure if you are joking or not. In case you are not, the problem with house buying is not to find out who owns it, but trying to address the value and condition etc. And that you have to spend that 1 million in one go instead of Microsoft stock that you can buy $10 at the time.

you could but things like easements would make that much more complicated There are a lot of things that come / don't come with a piece of property (mineral rights, water rights, homeowner associations) that make it a complicated thing to own.

Yeah, but you'd accomplish nothing. Because the only way a registry could be meaningful in determining ownership, is if the government that protects your property rights considers the registration valid. And in that case, you have to trust the government which means a trust-based registry is far more simple and efficient. Could still be blockchain based though, with proof-of-authority. Could be nice to see a ledger seeing exactly who signed (with cryptographic signatures) the transfer of the property etc. Okay, that' be a kind of NFT-system, but not in the sense that most people think of NFTs (trustless)

For houses this is easy to prove. But this goes for nearly every other suggested NFT application, including tickets.

The trust calculus is different though. You still need to trust the legal framework in your jurisdiction honours the blockchain's authority over ownership.

But you can at least not need to trust the registry's "database" of who owns what.

> could use an NFT to represent digital ownership of the underlying physical asset

So, you arrive at "your" property with a 20x20 pixel jpeg that you call your ownership rights (even such a jpeg would be prohibitively expensive to store on blockchain, but whatever).

So, you arrive, and there's someone else living there. They don't want to move out, no matter how much you wave your jpeg around. What does your NFT give you in this case?

They may even have a copy of your JPEG! Now you are really screwed...

Reply on news.ycombinator.com