Raise billions out of poverty with land records on blockchain
Those of us lucky enough to live in developed nations don’t think much about how land recording works. Land records are what determine ownership and right to use a piece of property. In order to buy, sell or collateralize land you must be able to prove ownership.
There are, however, a lot of problems with land recording around the world today. In the United States 25% of title reports ordered when property is sold show some defect. Because there are so many errors in land records, and the land recording process is so opaque, title insurance was invented to protect land owners and lien holders. Title insurance protects those with an interest in a piece of property in case it is determined at some point after purchase that the seller did not have the right to sell the property or there was some other encumbrance on the property that effects the value. The risk is so high that title insurance in the United States costs on average about $1300. All this insurance is protecting us from is inaccurate and fraudulent land records.
The problem gets much worse in the developing world:
- 80% of land in Honduras is not properly titled.
- 50% of land in Syria is untitled. This is a pre-war estimate by the Syrian government, meaning the situation is likely a lot worse now.
- 90% of Sub-Saharan African land is untitled.
- $100 million in land was fraudulently transferred from government to private ownership in India in a single incident in 2017.
- Most land records lost in the 2010 Haiti earthquake.
Untitled land is a huge issue as the people that are using that land, and often depending on it as their sole source of income are vulnerable to corruption, conflict and natural disaster. There are over 1 million people who still cannot be resettled in Haiti after the 2010 earthquake because land records do not exist to determine who should live where. People that are trying to return to Syria are finding that they have no way to prove any land ownership. People in Africa that have lived on and farmed land for generations are finding themselves pushed out when corrupt officials sell their land to someone wealthier. Without proper title to their land, and because they are already very poor, there is little they can do to fight back.
As a result of untitled land, there is an emergence of “landless people”. In Brazil an estimated 5 million families that subsist on agriculture do not have title to the land that they farm on. The problem gets much worse on the Asian and African continents.
How land records work today
- Mostly paper records
- Primary record (paper) stored in a government building in the local jurisdiction
- Records are easily tampered with
As a result it is no surprise how conflict, corruption and natural disasters can so easily wipe out land ownership. This disproportionately effects the poorest people, and especially in rural areas in developing countries.
Land records on blockchain can solve the problem
The killer app of blockchain is transparent and immutable records. Perfect for storing land records that cannot be tampered with by corrupt officials, and cannot be lost during a natural disaster. This results in a reduction of fraud and corruption. Land disputes are easily solved.
Billions of people can be raised out of poverty by having proof of their title to land on blockchain.
In 2017 the International Monetary Fund (IMF) was involved in a $40 billion bailout to Ukraine with the conditions of modernizing institutions and eliminating corruption. Part of eliminating corruption is a plan to put land records on blockchain.
The Indian state of Andhra Pradesh is implementing land records on blockchain to prevent corruption and cyber attacks.
The list of countries exploring land records on blockchain goes on and on.
How do land records on blockchain work?
- Governments must recognize the legitimacy of land records on blockchain. If they do not, then the blockchain data is just bytes taking up space on hard drives around the world.
“I registered this in the blockchain and what is the value of it? None.” — Sergio Jacomino, Head of the Institute of Property Registry, Brazil
This statement from Mr. Jacomino highlights the importance of working with governments to find a path to the legitimacy of blockchain land records. In this case, the official tested a transaction on blockchain to record a land ownership transfer. If the only record that is considered to be valid is the paper records, then blockchain recording is pointless.
2. Self sovereign identity. Individuals must be able to own and control their identity in a way that corrupt officials cannot forge. With the proliferation of smart phones, it is increasingly common that even a very poor person in a developing country has the ability to manage their identity. As biometric identification becomes more common in cheap mobile phones, security will get even better.
3. Non-fungible tokens. This type of token has a unique ID that can then be used to convey ownership to an asset. Non-fungible tokens are already being used for popular apps such as Crypto Kitties. Real, valuable assets such as land can be identified with non-fungible tokens as well.
4. Land records on blockchain that link self sovereign identity and non-fungible tokens bring together all the pieces necessary to securely record title to land.
Working together to make this reality
In order for land records on blockchain to become a reality, the tech community is going to have to come together with governments and find solutions that work. This means defining standards and helping guide regulation that is beneficial to the people who need it most.
I believe that land records are one of the most valuable use cases for blockchain and can help prove the value of this technology.
Billions of peoples lives can be effected positively, and I think that endeavors such as this will prove to the world how valuable blockchain is.
The statements in this article are my own opinions.
I gave a presentation at the Non-Fungible Token Summit in San Francisco on October 12th 2018 on this topic.
