Editor’s Note: Last week, Bill reported on the continuing developments in the cryptocurrency markets. That prompted questions from readers, curious about the role government would play in regulating this new industry.

So today, we asked Jeff Brown, Bill’s top technology expert, to show what the future of blockchain regulation might look like.

It had been 20 years since I last purchased property. But recently, I moved my entire family across the country and needed to buy a new home.

Given how fast technology has developed over the last 10 years, I expected a simple, streamlined process.

What I experienced was the opposite.

In fact, nothing had changed in the last 20 years. The use of a fax machine was part of the process. I didn’t even know they existed anymore.

It required a couple of trips down to the town hall to physically collect records on the property, and a full title and municipal search had to be run.

In all, it took more than a month and thousands of dollars spent on a lawyer and a title company, not to mention the fact that it was an incredible drain on my time.

In fact, due to some unforeseen events that resulted from the municipal search, I wasn’t able to move into my new home on schedule. My family and I were forced to live in a small, two-bed hotel room for almost a month.

And here’s the thing… none of it was necessary.

Eliminating Friction

If you’ve ever purchased a home, then what I described above will sound all too familiar. Purchasing a house is a laboriously long process with countless middlemen to deal with.

But the technology exists today to remove all of that unnecessary “friction” from the real estate buying process. It will turn a month-long, expensive process into something that will take a matter of minutes and be performed for at least 90% less than what it costs today.

Blockchain technology not only holds the promise to eliminate this kind of friction, it can do so in a completely transparent, secure, and immutable way.

You may have heard of “blockchain” as the distributed ledger technology underpinning cryptocurrencies like bitcoin. But there’s much more to the technology than just supporting bitcoin transactions.

The first generation of blockchain technology was the bitcoin blockchain. In its simplest form, it is a store and transfer of value. The second generation of blockchain technology is the Ethereum blockchain, which integrated smart contract functionality onto its blockchain.

Smart contracts enable the ability to “code” or program the terms of a contract onto a blockchain. In this context, we can think of a blockchain as an immutable, secure, public database.

Efforts are already underway to register property ownership onto blockchains. Overstock (OSTK), through its blockchain subsidiary Medici Ventures, teamed up with one of the most important economists of our time, Hernando de Soto, to establish De Soto Inc.

The purpose is to have a global property registry whereby property rights can be confirmed, and property assets can be easily traded.

Smart contracts can be used to transfer ownership of a property from one owner to another.

As a simple example, a smart contract can be programmed to transfer title of a property from the seller to the buyer, once the agreed upon funds have been received into the seller’s bank account. This would be a completely automated system.

Blockchain-based lending services have already begun with interesting projects like SALT Lending and ETHLend that enable consumers with cryptocurrency assets to receive loans against those assets as a way to get some liquidity without having to create a tax liability by selling the underlying cryptocurrency assets.

This is all facilitated by a simple, smart contract mechanism. The consumer’s original collateral is held in escrow with the smart contract, new funds are issued against the collateral, and the collateral is returned to the consumer once the loan has been paid in full.

Again, this is a completely automated process requiring no intermediary.

If my home purchase had been conducted on a smart contract, it would have been completed in minutes. No middlemen… no fax machines… no hotel rooms.

The Biggest Risk to Smart Contracts

I recently attended a financial technology conference at which one of the pioneers of the blockchain industry, Nick Szabo, was speaking on a panel about smart contracts.

Nick wrote a seminal essay on smart contracts about 20 years ago… That’s how far ahead he has been.

While it has taken 20 years, the disruption has finally begun, and it will be a great benefit to consumers. Purchasing a house is one example. The example Szabo used was for a buyer and lender to control the ownership and borrower’s rights of a car. If a borrower doesn’t pay their car loan, the car won’t start. The moment the borrower pays their car loan, the car can be used.

And smart contracts can easily be implemented in the insurance industries and supply chain finance… Even your next employment contract could be written on a smart contract.

Smart contracts will simplify transactions, make them transparent, immutable, secure, and best of all, fast, and at a tiny fraction of the cost of what consumers are used to today.

Yet surprisingly, one of the biggest risks to smart contract implementation is unwieldy regulations. Very few are aware of this, but there is already a strong framework in the United States for smart contracts contained within the ESIGN Act and the UETA (Uniform Electronic Transactions Act).

However, several states have been introducing new legislation to impose additional regulations for smart contracts.

In short, this would be a disaster. Having individual state-by-state regulations for the use of smart contracts would stifle innovation and make it very difficult for new companies to bring innovative solutions to market.

This kind of regulatory structure only benefits large incumbents who want to keep charging “rent” as intermediaries or can afford to maintain compliance with each and every state regulation.

This is not the free market that we want, nor the one that we deserve.

Smart Contracts Need Your Help

While the majority of my work is focused on investment research in high technology, my background is as a high-technology executive. I’m part of the industry and I get involved in meaningful projects when I can help.

One of those projects is the Chamber of Digital Commerce, a leading trade association based in D.C. that advocates for a healthy regulatory environment in the digital asset, cryptocurrency, and blockchain industries.

In short, the Chamber of Digital Commerce is advocating for the future of the blockchain industry on behalf of consumers and companies, and all the benefits that come with it.

The work that the Chamber does is very meaningful and affects every U.S.-based consumer, and many abroad (the Chamber also works with foreign regulators and industry trade groups).

So I have a small favor to ask.

If, as a consumer or business owner, you would like to see a healthy market that facilitates innovation in smart contracts and benefits the economy, then there is a way to help.

Would you consider e-signing the Chamber of Digital Commerce’s letter supporting the existing regulations contained within ESIGN and UETA, making it clear that state-by-state legislation is not necessary nor wanted by the industry?

And don’t worry… You’re not signing up for anything and you’re not giving away personal information. It’s just a way to show your support as a consumer for the future of blockchain technology.

As a member of the Chamber of Digital Commerce, and as a consumer, I’d be grateful for your support. It will only take two minutes of your time. You can read and e-sign the Chamber’s letter by going right here.

I’m very bullish on the future of blockchain and smart contract technology. With smart contract technology, a needlessly complex task like purchasing a home could be just about as easy as purchasing a basket of goods on Amazon.

And with your help, I believe that day is fast approaching.

Regards,

Jeff Brown
Editor, The Near Future Report

P.S. With supportive government regulation, blockchain technology will rewrite our society the way the internet did back in the late-’90s. In fact, I think the transformation will be even more profound. And that presents an incredible investment opportunity.

I’ve recently identified three ways for investors to potentially make 21 times their money as blockchain transforms our world. Don’t take my word for it. Get all the details right here.