Blockchain Technology and the Future of Land Registries
Registration information has long been used to show evidence of land ownership, possession and claims. These registries are tasked with accurate record-keeping so that rightful owners can be identified and fraud can be prevented when land transactions occur.
Traditionally, landowners have had to rely on third-party intermediaries such as government agencies to manage land registration information. With the development of blockchain technology, however, its transparent and secure online ledger system is able to bring greater efficiency to the land title record-keeping process. Advancements here could prove particularly valuable in many parts of the world where people are unable to secure legal documentation of their land assets.
Amid potential blockchain applications in this space, questions abound on a number of different fronts: Is it feasible to manage property ownership via a distributed system that doesn’t rely on trust? What sort of logistical maneuvering would it require? And how best can we validate and identify who the current landowner is?
The blockchain offers a compelling case model for addressing these and other concerns as it allows for landowners to be identified through the use of public key cryptography. Moreover, when property transfers are confirmed in this manner, there is no need for verification on the part of a trusted third-party and costs are significantly reduced. The blockchain-centric system also can mitigate potential failures including fraud, errors and attacks through the use of cryptographic protocol.
Testing The Waters
Last year, a blockchain technology experiment facilitating land registries for Honduras had been discussed. This proposed partnership between the Honduran government and the blockchain firm Factom, however, never gained traction. At the end of 2015, Factom CEO Peter Kirby announced in a blog post that the “proof of concept” project had stalled due to political barriers and slow-moving government systems in that country.
More recently, the Republic of Georgia’s National Agency of Public Registry, the noted Peruvian economist, Hernando DeSoto, and the bitcoin mining company BitFury announced a three-way partnership focused on the design and piloting of a blockchain land titling initiative. Here, BitFury will lead the charge in developing an permissioned blockchain infrastructure for the registry. This private blockchain will be connected to the universal blockchain network currently utilized by bitcoin with a merge-mining feature to secure the registry. The ultimate goal? To serve as a land titling model for other countries to replicate, while demonstrating to the world that the Republic of Georgia is a corruption-free and transparent country.
Says Valery Vivilov, CEO of The BitFury Group: “We are uniquely positioned in the Blockchain ecosystem to support this breakthrough process, demonstrate the power of the Blockchain and assist in further developing Georgia’s modern and transparent property registry. A secure property registry built on the Blockchain can secure billions of dollars in assets and make a significant social and economic impact globally by addressing the need for transparency and accountability.”
Adds de Soto, who is the founder and president of the Institute for Liberty and Democracy: “Nearly five billion people throughout the world live without property land title records. This reality puts so many at a great disadvantage. This important project will show that governments that transfer their property registries to a blockchain-based system can establish a more transparent and well-recorded system that ultimately benefits the people and advances economic opportunity for all.”
Land Registries: The Value Proposition
Other blockchains, including Ethereum, have projects in development that are exploring applications for land registries. BTCMANAGER talked with Daniel Novy, a blockchain expert with ConsenSys and resident of Brazil, about some of the intricacies of the blockchain as applied to the development of a land registry. He is currently involved in a ConsenSys-based project called Regis, a platform that makes it easy to build, manage and deploy decentralized registries on the Ethereum blockchain.
Regis allows users to design and maintain user-defined key-value pairs without costly infrastructure requirements. As is the case with all applications layered on top of Ethereum, registry information is recorded on an immutable blockchain that has no central point of failure. Ethereum also makes it very easy to create such registries. “Essentially, the platform does all that work for you. It’s very flexible,” says Novy.
Regis is not exclusively a land registry. Rather Novy highlights its flexibility which allows any type of registry to be built, from a very basic one that maps one key to a single value to those that are much more complex and can be directed to one or more registries, allowing for a tree like system to be employed. And since Regis keeps tracks of all deployed registries, they can be searched by name, type, owner or tag.
Novy, who has an extensive background working with genetic algorithms, data mining, distributed systems and general artificial intelligence, said his fascination with the blockchain led him to devote his time to exploring new applications for this technology.
He points out four reason why blockchain solutions like Ethereum are ideal for land registries:
Record Immutability: “They are impossible to change. This helps prevent fraud on land registries, an occurrence which is very common in developing world.”
No Central Point of Failure: “It’s literally impossible to take the service down. There is no single target for hackers because the service is running on all the places at the same time since.”
Security: “I am very confident in saying this because there is an actual bounty of 7 billion dollars for anyone who discovers a security flaw in the Bitcoin blockchain. I’m sure there are thousands of hackers trying right now and they have been trying for the last couple of years.”
Tracking: “It allows you to keep track of all changes that have occurred and when. Anytime new data is added or an ownership transfer occurs it is registered immutable on the blockchain.”
Novy says that legal snarls, politics and regulations are the biggest challenges hindering the advancement of blockchain innovation in the land registry space. Yet he has an optimistic outlook for the future of this application.
The technology is here and is fully working for those willing to try it. As soon as we have ‘one single case’ which proves successful and is backed by law, then it will be just a matter of time before it will begin to emerge all over the world.