Blockchain solution in land registry:
Block-chain is beginning to be increasingly explored by different
industries looking to benefit from the accuracy and speed that the
technology can offer. We recently looked at the use of block-chain in banking and financial services and how it can enable faster business transactions while reducing back-office processes.
What is block-chain?
Block-chain is a form of distributed ledger technology (DLT) where data is distributed across a network of computers rather than being copied. Because it’s distributed, rather than copied, the danger of copies being altered and differing across the network is removed. With block-chain everyone who has access to the network automatically receives any changes made to the data.
By way of an analogy, if a digital document were emailed to multiple people, all of whom were making their own amends, block-chain would be the mechanism synchronizing these documents. This would ensure that whenever
the document was opened, and no matter who it was opened by, everyone would see the amends that had been made previously by the rest of the group.
The use of block-chain in land registry is primarily being explored for its potential to enable the almost instant transfer of property securely.
With smart contracts enabling self-execution when certain conditions are met, transactions could be completed faster. For example, a rule could be put in place to facilitate the title of a property being automatically
transferred to the new owner when they deposit funds to the appropriate account.
There is also the potential for the registration gap to be removed. The use of smart contracts would speed up the process by automatically updating the ledger, instead of buyers having to transfer ownership through an application form.
Understanding the impact of block-chain for real estate
The impact of the research being undertaken by HM Land Registry regarding block-chain and land registration will be interesting to observe. Businesses in the real estate sector should continue to remain aware of how block-chain could improve processes and speed up transactions. —Ali Haider—
A debate currently widespread is what will be the role that notaries or registrars will play in the process of transformation of the blockchain, understood as a global, instantaneous and decentralized registry without intermediaries.
One of the multiple uses that blockchain technology has in our future society is that of registration in the network, being able to register all the transactions that we enter in it.
This concept would come in turn associated with a public blockchain, which acts as a data storage system that we can access through the different addresses, being able to consult
any movement that has occurred in it, without the need for paper. or displacements to the registries as we know them at present.
So, where is the role of traditional notaries and, in particular, of the notary that currently verifies certain aspects of legal relationships? We could try to classify all the opinions although they are really very diverse and varied among themselves – around two main positions:
Those who defend that the blockchain will completely replace the figure of the notary and traditional records.
Secondly, those who defend that notaries and registrars will be a kind of new authority, within the blockchain network, that will validate certain data that is introduced in it.
In my point of view, we can not see blockchain or, rather, its transformation, as a process that will change all sectors of our society in the very short term. Like any other innovation, we will always have classic sectors that do not show much agreement with the change just because the change implies that they will be replaced by technology in the not too distant future.
It would be something similar to what has happened throughout history with all the technological advances that have been held back by those sectors that were going to be transformed, but finally, and although it is delayed, innovation is never stopped.
At this point, and in terms of blockchain technology, it is going to be a process that will take a few years until it really gets into certain branches of society. In its application as a registry and the role of notaries in it, it will suppose a very powerful break the fact that, in my opinion, the traditional registries will be reluctant to dump all the data in blockchain because, as we already know, that would imply not receiving all those fees that they charge us every time we want to register a document with the sole purpose of publicizing it.
Therefore, I believe that notaries and registrars are going to play a key role in the first years of the creation of this register based on blockchain since to operate in the network with certain transactions such as the sale of a property, for example there must be broad legal security.
That is, if I want to sell a property, it seems fundamental to me that I certify in the blockchain network that I am who I say I am, and that I own what I say I own. To do this, there should be a kind of authority, as some call it, that gives truth to that information to incorporate it into the network.
This is where the figure of the notary would enter. I will have to prove my digital figure and prove my ownership of certain assets with which I want to transact on the network. Otherwise, we would be in a network without legal security, which is one of the basic principles of our legal system.
For us to understand each other (and this is always my point of view), it would work like this: I want to sell in blockchain a property that currently, I have registered in the Land Registry. I should go to the notary so that he certifies that my digital identity corresponds to my real identity and at the same time, that I certify within blockchain that I am
the owner of property X.
Once this is done, I will be able to carry out
transactions with my property inside of the network, being already registered and without needing in the future that a notary (or external figure to blockchain) certify who has the property of that good, since it will be the data chains who do it.
The debate that I would like to raise is: once I have accredited my digital identity and have registered my assets in the blockchain, will the figure of the notary still be necessary? In my opinion, it will be quite limited, limited to giving truth to those transactions or operations that are carried out outside blockchain or to those goods that have been
acquired externally to the network and that we want to introduce (having to verify our property), since once we have our property registered in the network, we will not need anyone to prove that an operation has taken place. –Sophie–
According to Jonathan, blockchain is over-hyped, and unlikely to provided the promised benefits to numerous industries that are trying to revolutionize using the technology. Blockchain is really only good for one thing — supporting a private cryptocurrency marketplace.
3Pillar builds custom software solutions for businesses across the world, and Jonathan is inundated with requests for blockchain but before coding, he always tries to steer businesses away. For most clients, he argues, the technology can’t provide that must utility.
The blockchain can be used as a centralized, paper free, secure method of storing land registry information. The blockchain is virtually unbreakable, and it can be invaluable in preserving these records when disasters strike.
Just take a look at Haiti. After the hurricane struck, their records were destroyed, and now you have people fighting over the rights to the land and no way to prove it.
Just the other day, the UK’s Land Registry announced it was looking into the use of blockchain technology for domestic land registration.
Sweden’s land authority also recently began using the blockchain for property transactions.
Most notably, the UN’s Development Program initiated a collaboration project to build a land registry using blockchain technology for the city of Panchkula in India.
Putting land titles and registries on the blockchain is only half the solution, as banks require both the land titles in association with a unique identity in order to loan against them. Everest is able to provide a full self-sovereign solution to this problem, pairing a durable ledger to record the land titles and GPS coordinates with a biometric identity to verify the owner.
The combination of these two components unlocks the full value and financial potential of the land, making it bankable. For the owner, the application of blockchain allows them to use the land as collateral to borrow against. A land title without a verifiable identity doesn’t solve the challenge of whom does this land belong to.
Regarding property ownership on the blockchain. We are currently working in partnership with OpenLegal, which provides digital smart contracts for property transfer in Australia. We are building a solution that brings together digital escrow, digital money and digital contracts to create a seamless, efficient, secure and immutable property transfer process. We believe that this is the future of property ownership, and will significantly improve the complex and error prone process currently in place.
The White Company currently provides the digital money solutions necessary for property transfer, having launched White Standard Stablecoins which are 100% backed by USD, GBP or EUR on deposit, and are third party verified and audited to provide trust and transparency. We have integrated our stablecoin solutions into a multitude of global payment solutions and they provide a perfect foundation for digital property transfer.
The current proof of concept functions as follows:
1) An OpenLaw smart contract defines the terms of the property transfer, with standard property transfer conditions such as inspections, deadlines etc. When all of the conditions are met, they are recorded digitally in the contract. The contract also has its own Stellar Account which it controls programatically with its private key. This Stellar Account is set up to accept White Standard stablecoins in the buyer’s and seller’s currency of choice.
2) The Buyer would send in White Standard Stablecoin (for example WSD if settling in USD) into the Smart Contract. The process takes approximately 3 seconds, regardless of what country the buyer or seller is located, as White Standard is built on Stellar, a global worldwide settlement system.
This is significant better than days or hours for traditional bank transfers. White Standard stablecoins also incorporate a foreign currency exchange mechanism, such that a Seller wishing to receive USD can easily work with a buyer paying in GBP or EUR in a seamless way, without having to worry about foreign exchange fees or going through a complex process to do so at a bank.
3) The OpenLaw smart contract receives the WSD payment, and uses the OpenLaw connection to the Property Deed Transfer system to digitally sign and execute the transfer from Party 2 (Seller) to Party 1. This is made possible by a property record system that accepts digitally secured certificates to effect transfers.
The system is secure, and prevents errors in transfer like mispellings, wrong dates, typos, or even forged signatures as it’s self verifying and uses high level encryption and security.
4) Once the property transfer is complete and confirmed, the OpenLaw smart contract automatically and securely sends the WSD from its account to the account of the Seller, completing the transaction.
From start to finish, the entire transaction takes no more than 30 minutes and can be completed between a buy and seller who are thousands of miles apart, compared to what is typically a whole day of closing typical in property transactions requiring both parties to be present.
These solutions will become commonplace, but are likely to start with countries that are technologically advanced but have smaller property registers, such as Australia or Europe. In the US, the property ownership system is distributed not just by state, but by county, using a variety of different digital systems that don’t have a common standard.
Therefore, we believe that the US may be on of the later developed countries to adopt property ownership on blockchain but when it does, it will certainly use a solution based on the concept we have developed with OpenLaw. – Elizabeth White–