Opinion: A Transition to Blockchain Technology Urged for Land Registries
Disclaimer: The opinions expressed in this article are solely those of the author and do not represent the views and opinions of crypto.news’ editorial team.
Blockchain technology has been widely discussed in relation to real estate, but one aspect that is often overlooked is the land registry. While there is merit to the idea of real estate tokenization disrupting the industry through security tokens, I believe that this perspective lacks a comprehensive understanding of the potential impact.
As someone who has conducted extensive research on land registry systems, particularly in developing a next-generation system, I have introduced the concept of the “title token.” Unlike security tokens, which are simply assets representing ownership, title tokens serve as actual records of ownership. In essence, blockchain technology functions as a highly efficient database that can effectively manage title records, surpassing the capabilities of traditional land registries.
To understand why blockchain should be utilized in the next-generation property registry system, it is important to address misconceptions about the technology and highlight its transformative features. Firstly, it is crucial to distinguish between “permissioned” and “private” ledgers and the original definition of blockchains. Permissioned ledgers lack the immutability feature that is essential to blockchain technology. Blockchain was originally introduced as a method to verify the authenticity of data, not to protect it. The term “blockchain” emerged in the development of Bitcoin, combining the method of block chaining with a decentralized consensus mechanism to operate within a distributed network.
Permissioned distributed ledgers, including private ones, operate under the centralized authority of a controlling node or nodes. They lack the open, competitive, and decentralized consensus mechanism that is characteristic of blockchain. As a result, they do not guarantee data immutability and resemble centralized systems rather than true blockchains.
The fundamental advantage of blockchain lies in its ability to ensure data immutability. No other technology in history can guarantee this level of security. Major companies have experienced data breaches, highlighting the superior security of blockchain technology. The term “blockchain” should not be misapplied to various ledger technologies, as it creates a false perception of exceptional data security.
Securing data in a publicly accessible digital storage is crucial for land registries. Traditionally, the registry authority had to physically maintain infrastructure, such as paper registries or databases, which were vulnerable to data corruption or loss. Blockchain eliminates these vulnerabilities, allowing an unlimited number of users to make direct entries on a blockchain-enabled registry without compromising the database’s integrity. This applies only to blockchain, not permissioned distributed ledger technologies.
Blockchain has the potential to transform real estate transactions and registration by merging the acts of committing to a deal and registering it. In the traditional system, parties sign an agreement and then bring it to the registrar for official record-keeping. Blockchain allows for a single transaction that serves as a definitive registry record, eliminating the need for separate acts. However, it is important to note that certain situations still require the involvement of a registrar, such as resolving disputes or cases of inheritance or lost private keys. A well-designed blockchain registry system can provide administrative access while automating most functions.
To fully embrace the innovative potential of the digital economy, land systems must overcome their vulnerabilities and dependence on intermediaries. Blockchain technology offers a decentralized, open public infrastructure that secures data and mitigates the risk of irreversible loss in property registries. The Blockchain Estate Registry concept proposes a system where most transactions can be verified and registered automatically, without human intervention.
It is essential to recognize that blockchain does not inherently guarantee immutability, as this depends on the network’s scale. Smaller networks may be susceptible to certain attacks, while larger, established networks are more resilient. Public registries should prioritize blockchain networks with a longstanding history and substantial community.
I advocate for the adoption of a multi-chain system through a cross-blockchain protocol to address concerns related to bandwidth, scalability, transaction speed, and cost. This approach enables public property registries to leverage the benefits of blockchain technology effectively.
In conclusion, blockchain technology has the potential to revolutionize land registry systems and unlock the innovative potential of the digital economy. By securing data in a decentralized, open public infrastructure, blockchain mitigates vulnerabilities and automates intermediary functions. The adoption of a multi-chain system can address scalability and cost concerns, making blockchain a viable solution for public property registries.
