Land ownership registration systems are a problem in several countries around the world. Very often, land tenure rely on notarial regulation, where the government usually designate a third party to legitimize the right of property of a landowner so that a number of transactions may be secured.
The problem is not only about buying and selling land, but it does also include operations that may look simple, such as acquiring an agricultural line of credit to buy new machinery or secure harvesting in a given season. Falsification of documents, natural disasters or irresponsibility of administrators may lead to serious problems in these grounds, impairing millions of people, in addition to the huge spread that intermediaries accumulate between borrowers and creditors.
In fact, relatively secure systems of land registration are quite recent in human history and do not yet contemplate most nations. A formal land ownership registration service are unavailable for 70% of the world’s population. In Africa, for example, only 10% of the continent’s surface is formally documented.
In countries such as Brazil, 50% of the properties are estimated to be outside the formal economy — in the favelas there are 11.5 million people, almost 6% of the total population. Deprivation of land regularization is often pointed out as one of the most important causes of poverty, since regular property remains the main guarantee of access to capital.
Blockchain offers a wide range of possibilities to remedy the problems caused by the need for intermediaries in land registration. In a decentralized ledger, a hash is given and permanently stored for each land transaction. This allows for the traceability of the entire history of the property, without the possibility of manipulation of the titles. The public ledger may be consulted at any time to ascertain the validity of any property claim.
In this model, governments or regulation bodies can operate as network administrators, which mitigates the need for intermediaries who might disrupt the transaction or limit access to the registration of properties. More disruptive alternatives can also be conceived, in which the transfer of ownership would take place without a government mandate, in the form of smart contracts between the parties. This means that what was signed in the public ledger, signed digitally between the parties, would have public faith and therefore legal authority, upon on-chain payment in cryptocurrencies, or even off-chain payments as it is usually done.
A distant dream? Not so much. One of the most successful projects in progress in this area is in Georgia, led by the National Land Administration in partnership with startup Bitfury and with institutional support from GIZ. The implementation of the model has started in 2016 and several international bodies now consider it a successful experience. The system helped increase government efficiency and restore credibility in government agencies. By 2018, 1.5 million ownership titles had already been published in Blockchain. There are other pilot projects in Honduras, Ghana, Rwanda and Sweden.
There are many obstacles, but we are moving forward. The revolution has already begun and you may be part of it
