Quote from: utdrmac on July 04, 2017, 03:49:09 PM

I've been "around" bitcoin for several years now and one thing has always puzzled me. One of the things I tell people new to BTC on why it is so great is when I describe the purchase/sale of a car, and how that contract goes on a ledger that cannot ever be changed.

I give this example, but I have no idea how this would actually work. Can someone describe the process to me? In order for it to be legal, all the documents would have to be signed and sent to the state (I live in TX) to properly transfer ownership.

Would I scan all those documents into 1 PDF and somehow "attach" them to the block containing the transfer of 5 BTC to my address (assuming I'm selling the car)?

If I had to go to court to prove that I sold/bought said car/property to/from person X, how would the blockchain be useful to me in proving my case?

Basically,

(1) You would scan all finalized signed agreements into a PDF or JPEG and then hash that file.
That file and all of it's contents are now representable as that hashed string.
If I change that hash string by a single character, the contents of the file would not match.

(2) You then either use the Bitcoin blockchain or an altcoin blockchain and when making a
transaction, you add that hashed string as one of the outputs (which the Bitcoin blockchain
will not recognize as a standard output). You do not need to transfer 5 btc with this TX, it
could be as low as a dust transaction, and you could pay or already have, for the property
in cash. In theory, when you signed the document, you would then or have already exchanged
the property/money. You would then add this file's hashed string after that exchange, thus you
would only pay the dust limit, plus a miner fee to add this hash string to the blockchain in
memorialization.

(3) After so many blocks pass and in the future, you could use that block number and TXID,
(its non-standard output which is the hashed representative) as proof that the original finalized
signed agreements were added to the blockchain around that date, allowing the ability to prove
that the document is not a modern day fabrication, but did exist at that point in time.

(4) You are not adding the file(s) to the blockchain itself, but only an anchoring citation. If you
or another party to the agreement no longer possesses the fully executed agreement, and the
document does not exists in any governmental record, then the "anchoring citation" that you
performed in the blockchain is worthless. It is dependent on the original documents still being
retained in their physical form or the PDF/JPEG form.

---

The reality is that this part of record keeping/registering in conjunction with law and property
is very insufficient. Ultimately, no matter the circumstance, a trusted third party, such as a
governmental/judicial body, will need to intervene at some point. Most property can not be
exchanged between humans on a blockchain system without governmental registration,
unless that blockchain is maintained by a governmental office itself. All physical property
is normally registered and regulated by your government.

This system of data being anchored in the blockchain can only be useful for personal
agreements between people/entities that do not wish to register with governments or file
with judicial record systems, such as employment agreements or agreements to perform
work and etc. If later in the future, you wish to litigate one of the parties due to a breach,
this blockchain anchoring system only proves it was added to that blockchain at that date
the block incorporated your TX. It will not prove that your agreement is legally sound or
binding or etc. As I said prior, a third party, such as the Courts, will still need to intervene
and interpret the terms and decide the matter.

The truth is that the blockchain, used in this manner, is inefficient and worthless in
many use cases. If you wish to prove you created something novel like a new innovation
or a piece of art, that is interesting and helpful. But human health records, property
settlement agreements, marriage/divorce/birth records and etc is not at all necessary
whatsoever. This anchoring system is only necessary if governments do not exist.

The blockchain was only really designed for unregulatable currency. Using it
for "unregulatable documents of regulation" is really quite amusing.