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Homeowners Need 'Bitcoin' Not Just 'Blockchain' For Online Services

 

This blog makes the case that focussing simply on the benefits that Blockchain can deliver for property sales misses a bigger service opportunity for homeowners.  A truly digitised housing services market will need a property ‘Bitcoin’ equivalent on top of Blockchain to  unleash the next generation of PropTech and Smart Home services.

 

By Lizzie Newman  - The way we manage our homes is increasingly being digitised.  A recent consumer survey conducted for Chimni showed that homeowners now have between 10 and 25 online accounts that relate in some way to home management. For homeowners at the lower end of this range, these may just include links to utilities, telecoms and insurance providers. More digitally adept homeowners may have accounts on their local authority and resident associations sites, DIY and price comparison sites.  At the top end or this range are the fully digital homeowners who have adopted ‘smart’ and IoT devices that are managed online and through apps.

For the most part, these accounts are primarily linked to homeowners as a person, with only a tenuous link to the property address data held as part of a customer profile.  However, increasingly online service accounts are specific to our properties and the technology in them, with the home address and property profile central to the account.  Right now anyone can open an account with an online provider and offer a home address with only limited validation of their right to do so.  This has not been a problem up till now, but with data ownership increasingly an issue, its about to become one.

There are of course some checks possible. A credit card profile would previously have helped confirm the link between a person and an address.  But this link has been weakened or removed as people increasingly have credit cards linked to work addresses, or have multiple different homes to manage.  Online utility accounts are able to point directly to a meter or named device in the home and prevent someone setting up an account without that link being present.  But that only covers a small number of providers.

Tthere are a growing number of online products and services, like Chimni, which are intended to be part of your home’s online profile but where there is no physical device in the home to attach an account profile to.   It is a crucial part of the Chimni proposition to make sure that there is only ever one account set up for each home in the UK. But we currently have no online mechanism for linking a person’s digital profile to an online property profile other than confirming a name with Land Registry or a commercial provider like Experian.

These systems make it possible to check online that ‘John Smith’ lives or owns a particular address.  But how does an online provider make sure that it is the right John Smith?  There are currently 350 John Smiths in London alone and 50,000 in the US.  As part of an online service set-up process, providers need to be able to link to a system that confirms that not only does ‘John Smith’ have the right to set up an online account for a particular property, but that the ‘John Smith’ that they are dealing with, is the same John Smith as listed in the asset register at Land Registry.   This is where blockchain and bitcoin technology may come into play.

 

What is The Blockchain Concept.

There has been a flurry of recent PR around ‘Bitcoins’ which are a form of digital or online currency that have the long term potential to replace national currencies.  Bitcoins are a digital token – representing a cash value - that can be used for online transactions.  However, unlike most digital things, Bitcoins are like real cash in that the digital file can’t be copied or replicated.  You can pass one over to a new owner as payment in a transaction but not keep a copy.  Underlying the Bitcoin concept is an online register of all coins and transactions, built using a new technology called blockchain. 

The Bitcoin blockchain is a public record or ledger of all Bitcoin transactions that have ever been executed. The software is configured so you can add a transaction onto the end of the chain, but not wipe previous data, meaning the chain of information grows over time.   The blocks are added to the blockchain in a linear, chronological order creating a public ledger of all transactions that have ever taken place.  A copy of the Bitcoin blockchain is kept on multiple servers around the world (in the same way that the web addressing directory is held on thousands of routers around the global web). This is called the distributed ledger principle. 

When a bitcoin transaction takes place and a bitcoin is given in payment for something, each server with a copy of the blockchain is quickly updated.  No one copy of the ledger is deemed a master copy. A blockchain distributed ledger is therefore constantly growing as 'completed' blocks are added to it with a new set of transactions. 

 

How Does This Apply to Housing

The blockchain is seen as the main technological innovation of Bitcoin.  It records all activity and stands as proof of all the transactions on the network. There is no need for trusted intermediaries, like a Land Registry, in this world so this underlying blockchain technology could revolutionise property registration and ownership.

The idea of a blockchain-based distributed ledger for housing records is not new.  It is being investigated by various countries in the world, such as Greece and Panama, who previously have not had an equivalent to the UK’s Land Register.  It may allow these countries to leapfrog into a position of leadership in how they manage their property registers and enable online property transactions in the 21st century.

However, to focus solely on the Land Registry and property transaction implications of blockchain misses a major point. Chimni believes that for online housing services to truly become established, we need both the blockchain AND a bitcoin equivalent function.  In housing an equivalent bitcoin file format – lets call it a ‘Brick-Coin’ - could represent an online deed of ownership and could store not just a record of sales transactions for that property, but also information on who owns rights to access the data and services set up for a particular property. 

In this concept, only one Brick-Coin would ever be issued for a particular property, and its ownership recorded on the blockchain ledger. This makes possession of the Brick-Coin a unique identifier and confirmation of property ownership.  For service providers this could be revolutionary as they wouldn’t have to poll an online ledger to prove that someone owned a property.  Any current holder of a Brick-Coin could set up an online account relevant to a particular property by making it available, via private key[1], during online account set up.  If you possess the correct Brick-Coin you can set up an account for a particular property.   

Nobody would be able to sign up for an online service for their home without ownership of the Brick-Coin or one of its subservient keys.  Most importantly, there could be different versions of keys attached to any Brick-Coin covering freehold, leasehold and rental situations.  The nature of the services that a person could set up could relate to these levels ie you could set up an account with a utility if you hold the leasehold or rental level key for a particular Brick-Coin, but you couldn’t put a house up for sale on RightMove unless you have the freehold class Brick-Coin key.

Also, there could be keys for multi-occupation households. Parents could hold a duplicate key each, but give keys with limited access to children to access certain services.  The brick-coin would hold the relevant access and permission data for each of these keys.

 

Further Benefits

As we use the growing number of internet connected devices and services in our homes, service companies are building data profiles that will become part of our homes digital ‘footprint’ in years to come.  However, a homeowner’s access to this data is currently limited, particularly if they have only recently taken possession. 

Most account data with utilities and other ‘traditional’ service providers is linked to a person not a property.  This also holds true for new services like smart thermostats and networked central heating. When that person moves home the data record is lost to the next homeowner. If you have just bought a property you have no right to view the historic utility cost or performance data for that property.

Chimni want to establish a principle that home data generated in this new ‘smart’ and ‘connected’ world should be vested against a property profile, not a personal one.  Most importantly the data should be viewed as an asset of that property, not of the service provider. We want a situation where account data and historic performance records can pass to any new owner on sale.  

Our Brick-Coin principle will enable this.  If data records are held against a property profile, then any person holding the Brick-Coin for that property should be able to access record data.  Even if your property has changed hands three or four years in a previous decade, a homeowner should be able to access all data pertaining to the performance of that property (irrespective of who set up the account, or who the service provider was). Showing you are now the holder of that property’s Brick-Coin should unlock all historic data held against that property.

Summary

Now that the future public ownership of the UK’s Land Registry has been secured, they should set out plans for a decade of innovation around distributed ledger and property ownership records.

Our proposal is that this should push much further than just blockchain and distributed ledger.  We are not proposing to remove the current Land Registry system to facilitate smoother, digitally-enabled, property transactions, and to foster a more vibrant online service culture around our homes from which Chimni, and any other online service provider with data at its core, would most certainly benefit.

Lizzie Newman

 


[1] A private key is a secret code which allows the user to prove his ownership of his Bitcoins. Every Bitcoin address has a matching private key, which is saved in the wallet file of the person who owns the balance. The private key is mathematically related to the Bitcoin address, and is designed so that the Bitcoin address can be calculated from the private key, but importantly, the same cannot be done in reverse

 

 
 
 
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