Introduction: Blockchain For Land
Blockchain,1 the distributed database technology underlying Bitcoin and other cryptocurrencies, has garnered substantial interest from the public sector in recent years. The global blockchain market is large and growing—it is predicted to exceed $2.3 billion by 2021—and governments and their private partners are exploring a wide range of use cases.2 Examples include voting, taxes, healthcare, and, perhaps most substantially, land administration.3
The technology could revolutionize portions of the land administration and real estate sectors. Within high performing economies, blockchain promises to streamline transactions and allow for greater investment opportunities. It may also help protect poor communities from land grabbing and lower the chances of record tampering throughout the developing world.
This potential has started to bear out in several places. The country of Georgia and the blockchain firm Bitfury successfully anchored4 1.5 million land titles on a blockchain in order to help fight corruption and bolster public trust in government institutions.5 Elsewhere, the Smart Dubai Office plans to use blockchain to increase efficiency in the city’s real estate sector, allowing residents to find a new apartment and sign a lease within minutes.6
But much like the larger blockchain ecosystem,7 blockchain-for-land has suffered from uneven growth over the past few years. Some projects have scaled to reach larger populations, while others, such as those in small Vermont towns8 or Brazilian municipalities,9 have struggled to grow.
Why?
Part of the explanation is technical. In 2018, my colleagues Michael Graglia and Christopher Mellon presented seven prerequisites for a successful blockchain-for-land project,10 including a working identity system, digital records, accurate data, and internet connectivity.11 One year later, these prerequisites still appear correct.
But we are discovering a larger, more fundamental problem: blockchain projects are often being undertaken by governments who are enthusiastic about the technology but fuzzy on how it actually works and what it can and cannot deliver.
Put differently, our technical criteria are necessary but not sufficient for successful adoption of blockchain. Projects must also be based on the following expectations: the land registry in question is more or less functional; officials understand what blockchain can do for their registry; blockchain will be applied to a problem that it can fix; and myriad land administrators will be early adopters of the technology, helping blockchain-based solutions to scale in an ever growing ecosystem. If any of these initial assumptions prove false, a blockchain-for-land project may encounter serious obstacles, or might not even advance past the initial exploratory phase.
It may be tempting for governments to experiment with an exciting new technology, but time, energy, and resources are not unlimited. And for the people and places that could most benefit from the technology, the misdirection of resources also translates into missed opportunities for development. In order to more successfully implement a blockchain-based land solution, governments must first think more critically about their capabilities, needs, and ecosystems.
In order to more successfully implement a blockchain-based land solution, governments must first think more critically about their capabilities, needs, and ecosystems.
The purpose of this report is to assist land officials during their exploration of blockchain technology. A number of suggestions for preliminary steps will be discussed:
- Get the Right People Involved: At its most basic, blockchain is a database technology. But it may also have far-reaching political, social, and economic effects. Any project should engage with a variety of stakeholders.
- Identify the Problem You are Trying to Solve: A land registry can suffer from many different problems. Blockchain cannot help to solve them all.
- Be Realistic About Your Expectations: Blockchain is a powerful new tool, but it is not a panacea. Potential benefits are limited.
- Make Sure Your Solution Can Scale: Bureaucratic and political factors must be taken into account if a solution is to impact large populations.
Citations
- This paper does not intend to discuss the highly technical intricacies of blockchain at length. For purposes of clarification, however, below is a high-level explanation of blockchain technology: Blockchain is “software that [allows] thousands of [users] to simultaneously serve as custodians of the same continuously updating body of records[, or ledger.]…The time and origin of every [transfer or transaction is] recorded and revised at the same time on a multitude of independently run computers. A majority of these computers [must] validate any new “block” of transactions [for it to be added to the “chain”] (hence the term, blockchain). For these reasons, it [is] virtually impossible for anyone to hack it, cheat it, or manipulate it. And since the ledger [is] not confined or reliant on a single server, but many independently run “nodes,” no single entity [controls] it.” Since its invention, programmers have built increasingly sophisticated blockchains, and some incorporate self-executing “smart contracts,” which can automatically exchange assets between two parties after certain conditions are met (Adam Piore, “Can Blockchain Finally Give Us The Digital Privacy We Deserve?,” Newsweek, February 22, 2019, source).
- Brittany Ryan, “Beyond the Buzz: The Real Impact of Blockchain Technology on Real Estate,” Growth House (blog), Follow Up Boss, August 10, 2018, source.
- Jorden Woods, “Blockchain: Public Sector Use Cases,” CryptoOracle (blog), Medium, October 2, 2018, source.
- “Anchoring” is an auditing mechanism that involves storing a unique, cryptographic “fingerprint” of data on a blockchain in order to ensure data integrity (Tomicah Tillemann, Allison Price, Glorianna Tillemann-Dick, and Alex Knight, The Blueprint for Blockchain and Social Innovation, Washington, D.C.: Blockchain Trust Accelerator, last updated January 22, 2019, source) (Disclosure: the Blockchain Trust Accelerator is an initiative within Bretton Woods II, another program at New America).
- Qiuyun Shang and Allison Price, “A Blockchain-Based Land Titling Project in the Republic of Georgia: Rebuilding Public Trust and Lessons for Future Projects,” Innovations 12, no. 3-4 (Winter-Spring 2019): 72-78.
- Rohma Sadaqat, “Blockchain addresses key issues related to efficiency, trust,” Khaleej Times, January 15, 2019, source.
- For example, see Jeff Kauflin and Sarah Hansen, “Cryptopia in Crisis: Joe Lubin’s Ethereum Experiment Is A Mess. How Long Will He Prop It Up?,” Forbes, December 5, 2018, source.
- Anne Wallace Allen, “Business group aims to position Vermont as a blockchain magnet,” VTDigger.org, December 12, 2018, source.
- “Can blockchain save the Amazon in corruption-mired Brazil?,” The Economic Times, last updated January 25, 2018, source.
- The original report was presented at the 2018 World Bank Conference on Land and Poverty in Washington, D.C. (J. Michael Graglia and Christopher Mellon, “Blockchain and Property in 2018: At the End of the Beginning,” paper presented at the 2018 World Bank Conference on Land and Poverty, Washington, D.C., March 20, 2018). A revised and shortened version of the report was later published in the peer-reviewed journal, Innovations, published in summer 2018 (J. Michael Graglia and Christopher Mellon, “Blockchain and Property in 2018: At the End of the Beginning,” Innovations 12, no. 1-2 (summer-fall 2018): 90-116).
- Graglia and Mellon, “Blockchain and Property in 2018,” Innovations, 94.