A New Solution to an Old Problem

International

Citizens in many countries the world over are plagued by an inability to record their land interests in a reliable and secure registry. Inefficiency, corruption and nepotism are rife, leaving countless people at risk of losing their land, and the livelihood they derive from it, at the whim of government officials. Unfortunately, most people in this situation are left with little, if any, legal recourse. The ramifications can snowball quickly, as a title is usually required to take out a loan using property as collateral, thus robbing these citizens of a path towards upward mobility. The scope of this issue is staggering – economist Hernando de Soto estimates that 73% of the world’s population lack “a title that is legal, effective and public regarding their control over” the land on which they live, resulting in an estimated $20 trillion in “dead capital.” (http://www.forbes.com/sites/laurashin/2016/04/21/republic-of-georgia-to-pilot-land-titling-on-blockchain-with-economist-hernando-de-soto-bitfury/#6986f6de6550).

Blockchain technology is one promising solution to eradicate some of these issues that beset land registries. A recent Deloitte report on the application of blockchain technology to the public sector highlighted land registries as one of several areas in which blockchain use could increase reliability and security. (http://www2.deloitte.com/content/dam/Deloitte/uk/Documents/Innovation/deloitte-uk-blockchain-app-in-public-sector.pdf). Blockchain, in essence, is a “distributed database that contains transactional data which can represent anything.” (http://computer.financialexpress.com/interviews/the-non-financial-side-of-blockchain/18813/#sthash.9tuEk4VE.dpuf). This technology can be applied to land transactions in the same way it is used for Bitcoin with payments of funds – each piece of property is assigned a unique set of numbers, which is then recorded in a publicly available blockchain ledger. When a piece of property is recorded on such ledger, every transaction involving that property can be publicly viewed, thus decreasing transaction costs and protecting against corruption.

Several countries are currently using blockchain ledgers to repair their deficient and corrupt land registries. Last year the blockchain initiative Bitland launched a pilot program aiming to give individuals in disenfranchised areas of southern Ghana access to these ledgers to register their property or dispute land ownership. (http://www.forbes.com/sites/rogeraitken/2016/04/05/bitlands-african-blockchain-initiative-putting-land-on-the-ledger/#463185a01029). The Republic of Georgia announced plans to test a similar program using blockchain earlier this year. (http://www.forbes.com/sites/laurashin/2016/04/21/republic-of-georgia-to-pilot-land-titling-on-blockchain-with-economist-hernando-de-soto-bitfury/#6986f6de6550).

These early adopters hope the use of public blockchain ledgers will improve the reliability of their land registries and act as a deterrent to corrupt officials. Further, they hope the increased dependability of blockchain will free up capital for productive use, as well as facilitate foreign investment by providing secure platforms for property transfer and recordation.

For some, blockchain is an apt investment, for others, a symbol of opportunity, but for citizens in countries that lack a reliable land registry, a pathway to a bank loan will do just fine.

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