Blockchain and Securing the Land Registries

The rise of the cryptocurrency phenomenon over the past decade has been transformative in more ways than one.

The underlying technologies behind digital coins have had (and will continue to have) major consequences in a wide array of industries. This can be best seen in the current “cryptocurrency crisis” which somewhat resembles the 2017 collapse, although its impact to date has been less severe.

Alas, this is ultimately the path many super-impactful innovations take when integrating with civilization: things intended to perform a relatively specific, even niche function, end up changing the very nature of domains far afield from what was ever in their inventors’ minds.

The blockchain is perhaps the strongest example of this pattern ever yet to emerge.

A New Business Record Paradigm

When the bitcoin whitepaper was first published back in 2008, it was clear the author (or authors) intended the ideas therein to support an alternative monetary system: it was right there in the title “A Peer-to-Peer Electronic Cash System”. However, it didn’t take long before industries as diverse as finance, medicine, law, and real estate, were waking up to the potential contained in the so-called alternative ledgers being built to support bitcoin and other crypto money.

The core advantage offered by blockchain-based ledgers is the immutability inherent in the system--the decentralized nature of the ledger means no one side can possibly hope to alter, erase, or otherwise tamper with the records kept within. From a business perspective, this provides a host of incredible benefits like the ability to eliminate most reconciliation services as well as facilitate trusted and direct transactions between parties, cutting out many common middle-man expenses.

But perhaps the biggest advantage of blockchain technology is the asset-tracking capabilities it brings to modern commerce. In short, blockchain enables its participants to continuously track a given piece of property, all within a secure model that is fault-tolerant, resilient, and permanently available.

A Game Changer for Real Estate

Perhaps more than any other industry, the real estate market is plagued by a lack of clarity when it comes to authenticating ownership and transactions history. Land registration processes the world over are fraught with vulnerabilities that can be used to cheat not only individuals, but major corporations and governments.

The notion of transferring land deeds and registration to the blockchain is no longer theoretical. Local governments have already begun demonstrating proof of concept systems. Earlier this year for example, the municipality of South Burlington, Vermont launched a pilot project with the company Propy, to create blockchain-recorded property deeds. What makes the Propy model and other similar models so great is there is very little, if anything, to adapt to as far as the end user is concerned. A deed registered on the blockchain looks like any other deed--a standard document with all the typical ‘legalese’ that property buyers are used to. The difference lies in the record of that transaction being permanently embedded in a decentralized network of digital nodes. At the end of the deed document, a long string of letters and numbers followed by a QR code give any person access to the deeds location on the official registry. This offers total transparency to the full history of transactions involving that asset.

In addition to transparency, blockchain also offers a level of security that is essential for the real estate market. Because of the uniquely high value of land assets, the records of land ownership are regularly subject to fraud attempts--whether that fraud involves counterfeiting hard documents or hacking databases. The traditional way of dealing with these--or any other--security risk has been to add additional layers to the authentication process, an approach that often only inconveniences criminals, but does not stop them. Blockchain offers a qualitatively superior model for securing fraud-vulnerable assets such as real estate. Blockchain provides quality security that is both impervious to traditional hacking methods, and equally if not more important, seamless, and efficient.

The Search for Smooth Adoption

While many recognize the benefits of blockchain-based ledgers, especially when it comes to recording land ownership, there are still challenges that will require resolution.

The common denominator between all these challenges tends to be integration with existing methods. Today, many registries are run by clerks using traditional databases and other legacy record-keeping systems, in some cases still paper-based systems. To introduce a paradigm-shifting technology into these outmoded arrangements would require a complete revamp, which, although saving time & money in the long run, would necessitate some level of disruption.

Fortunately, innovators in the blockchain space are showing how these new ledger applications could also be accomplished with minimal disruption to existing systems. Experimentation in several fields such as ballot counting is showing how the blockchain can be layered over current data systems (even hard-copy record banks) to provide an alternative means of information tracking in tandem with the old way of doing things. This arrangement can be used as an interim stage until blockchain becomes the primary method, or, in theory, remain as a permanent hybrid model.

Moreover, the potential of using blockchain-based ledgers for the purposes of land registration have not been fully recognized. For international organizations such as the European Union (EU) blockchain could easily transform the process of land registration by adopting a dedicated land registry common to all 28 EU member states. It would enable EU citizens to smoothly and quickly manage their properties located within the EU. It would also add increased transparency for the participants involved in such transaction in such transactions, whilst adding an additional layer of trust which is vital in today’s day and age.

These systems of radically improved land registries have been shown to be not only viable but very much working and practical methodologies. With a bit of innovation and willpower, blockchain property authentication can become the standard for a better future.