A summary of challenges blockchain-for-land encounters from a New America expert.
Tim Robustelli is a Program Associate with the Future of Property Rights Program at New America, a think tank based in Washington, D.C.
The flurry of activity related to blockchain-for-land over the past few years is impressive, with a number of firms working with land registries worldwide.
Yet, skepticism is growing around the technology’s potential for land administration due to the fitful growth of various pilots.
Some projects, notably those in Georgia and Dubai, do continue to grow. But other blockchain-for-land efforts — such as those in Vermont, Brazil and Ukraine — have succumbed to “pilot-itis.” These projects worked on a small scale, and were even replicated, but haven’t been able to reach larger populations.
There are a few noticeable trends behind why some projects scaled and others didn’t. Pilots that struggled to expand ignored influential stakeholders in the early stages. Or, projects tried to address problems for which blockchain was an ill-suited solution. There were frequently unrealistic expectations concerning outcomes, partially due to a lack of blockchain education. Projects are too often undertaken by governments enthusiastic about the technology, but fuzzy on how it works and what it can deliver. Sometimes, a project was implemented under the wrong bureaucratic or legal conditions.
A land registry should first think more critically about its capabilities, needs and ecosystem before implementing a blockchain-based solution. A set of recommendations to assist land officials during their exploration and implementation of blockchain is below:
Get tech experts and land experts in the same room
Blockchain is a database technology at its most basic, while land administration is a public issue with wide-ranging political, social and economic impacts. So, the stakeholders in the room need to understand both technology and land. Those are usually two different sets of people.
A blockchain-for-land project should engage with political, technical and socioeconomic stakeholders from the very beginning. For example, senior land officials can provide long-term strategic vision, and also possess the experience to spot unintended consequences and risks related to blockchain. IT professionals understand technological nuances and can better evaluate blockchain as a back-end technology. Finally, outreach to the broader real estate community can help to promote blockchain as a tool to improve business operations.
Identify the problem and determine whether blockchain can actually solve that problem
Stakeholders must work together to answer the following question: What is limiting the everyday functionality of the land registry?
There are many possible responses, ranging from undocumented land rights to record manipulation, poor service delivery and sloppy paper-based storage. But blockchain can’t solve every problem, and identifying the specific issue to be solved will help determine whether blockchain is an appropriate answer.
Blockchain will not address problems related to inaccurate, outdated or nonexistent records. Nor is the technology particularly helpful in cases in which records aren’t digitized. It can’t rewrite land laws or improve the institutional capacity of a registry, either.
Blockchain is useful for solving issues concerning corruption, lack of trust, inefficient services and secure data. Still, the technology isn’t a cure-all, and stakeholders must be realistic about the potential of blockchain:
- Blockchain replicates data across many computers or servers, increasing the resiliency of a land registry database.
- A blockchain-based system allows users to view the same data and track processes in real time, fostering greater transparency in land administration and real estate.
- It’s more difficult to attack a blockchain-based solution because, in part, it lacks a sensitive central point to target, leading to greater protection against hacks.
- Land records are more tamper-resistant in a blockchain because control is distributed, all users verify new data through consensus and all data is paired with a unique fingerprint — or hash — to ensure integrity.
- Data sharing, combined with smart contracts and digital signatures, can help to streamline workflows, remove non-value-add intermediaries and decrease transaction times for registries, real estate firms and customers.
Check if blockchain can scale in your environment
Pilot projects are a good first step to test a solution, but many struggle to expand. A big reason is that the enabling environment — the legal, bureaucratic, financial and political conditions — doesn’t facilitate scaling.
For example, it’s difficult to scale a blockchain-for-land project in a fragmented land administration system, such as the county-based system in the United States. It’s likely more efficient to deploy a blockchain on a nation-wide registry, or in a system within which local offices maintain technical interoperability and follow the same rules.
Pertinent laws and regulations must also change. No project exists in a vacuum; it’s subject to the rules of a particular jurisdiction. Governments may need to adapt or pass legislation that allows for land administration and/or real estate transactions to take place in the digital realm.
Last, buy-in from entrenched stakeholders profiting from the current system is usually critical if any reform project is to succeed. This process can be very difficult, but it’s sometimes possible through demonstrating the long-term benefits of the reforms.
As with most solutions to complex problems, technology alone is insufficient. Land registries must also consider the people and processes involved in reform efforts. After all, it’s individuals and institutions that are behind the ways in which technology is developed and deployed.
In order to better insure innovation and reform, land officials must think more critically about their capabilities, needs and ecosystems. Blockchain-for-land can positively affect populations around the world — if implemented correctly.