What Is Smart Property?
A smart property is the ownership of a person that is controlled using a Bitcoin via the blockchain network. For eg: Smart property may be your car, phone, or house. It also includes non-physical property like shares in a company. Making property smart to use, allows it to be treated with less trust. This will reduce fraud, mediation fees and allows trading to take place. It is an extension of smart contracts.
Understanding Smart Property Using Blockchain?
Take for instance you receive a fine for speeding on the highway. The police who comes over to your window, asks for a license and registration. Now, imagine instead of pulling out a bunch of papers, to show the police that you are the owner of the vehicle using the blockchain. The blockchain won’t get you away from paying a fine, but it will help in the way we transact assets and think of ownership.
2 Keys Of Ownership-Proof On The Blockchain
Under the blockchain, your car will come with 2 keys of evidence to prove its ownership i.e manufacturer key and ownership key. It will also show how many people have owned or owning the vehicle at present. The blockchain network requires authentication using an ownership key.
The stages of the car from manufacturing to ownership are recorded and the car would have a digital certificate from the manufacturer along with an identification key. This allows the car to prove its existence, age, and mileage to any third party entity. Using the blockchain-enabled smart contract, two people can reach an agreement remotely over any communication network and the agreement can be publicly verified.
Once car is sold, the following is done:
- The buyer of the vehicle generates a random number requesting the seller to send the information of the car.
- The seller gives the car a random number and sends the information of the vehicle along with an identification key. The data contains the random number, car data, the public key of the current owner and place of transfer of ownership.
- Then, the seller selects a key (K1) to receive the payment and names the price as P.
- The buyer generates a new ownership key (K2).
- The buyer creates a transaction with 2 inputs and outputs.
- Both buyer and seller wait for a confirmation.
- The buyer presents the vehicle with a Bitcoin transaction linking it to the blockchain. The blockchain then updates the ownership information and stores enough data.
This process not only allows a smartphone to verify a vehicle’s ownership, it could also be used to provide a smart (Digital) ignition key to secure the vehicle from theft. Smart property enables the blockchain to become a tool for managing property rights. A blockchain can also be used to make a rental agreement for an apartment or home.
Benefits Of Blockchain-Based Smart Property
Established Sectors can also benefit from the blockchain. Hotels for eg: Imagine not needing to pass through the check-in desk of an hotel. Your Bitcoin address automatically becomes your room key and the payment is automatic. Your access to the hotel will expire when your departure date rolls around. By democratizing the use of smart property and programming its access to one’s custom conditions, the concept could give rise to new types of group governance, decision making, and rule enforcement. By this, a new type of ownership structure could develop and result in new types of markets.