Value Proposition of Blockchain Applications in Land Management

Anurag Chaudhuri blog published February 25, 2020 | modified February 25, 2020

land blockchain

Value Proposition of Blockchain Applications in Land Management

Blockchain technology has gained signification interest in recent years, with estimates for the global blockchain market at more than $2 billion, and corporations and governments applying it at scale in a wide variety of applications across financial services, supply chain management, energy, healthcare, and even governance. In this paper, I will explore the benefits, use cases, technical approaches, and roadmap for blockchain applications focused in land and property management.

Advertisement
Student Coin

Managing a real-time, absolute, and accurate registry is one of the biggest challenges for land and property governance. Property records can be highly exposed to irregularities, as well as issues like unauthorized alterations, damage, and loss. These issues can result in unclear ownership with unproductive land use and financial loss. Formal and indisputable titles are necessary to spur productive land use by reducing development risks, facilitating transactional barriers, and unlocking access to finance.

Challenges in the existing land and property registry processes include:

  • The involvement of middlemen and brokers: Middlemen and brokers are an integral part of the real estate sector as they gather required information from builders and traders, identify errors, and facilitate implementation of transactions.
  • Prevalence of fraud cases: There have been several cases of pretenders posing as the owner and seller of a property. In many of the cases, buyers were unaware of the fraud until discovered by the land registry as part of a spot check exercise.
  • Time Delays: Land Registry can take a considerably long time to complete title registrations. There could be a gap of several months between completion and registration.
  • Human error and intervention: Updates to the land registry records are made manually and the accuracy of those changes depend on particular individuals. Human intervention can increase the chances of errors in the land registry system.

Blockchain technologies are specifically appealing for land registries because:

  • Information is stored using cryptography, meaning that every asset on a blockchain ledger gets securely encoded with a unique identifier that allows for protection and security.
  • Blockchain technologies operate on consensus, such that if a new record, like a property transaction, is added to blockchain, its authenticity is verified based on whether it has an authentic connection to other nodes within the network. If it does not, then the record cannot be added.
  • Blockchain allows for a distributed storage of records, where information can be seen and added to the network without having to rely on any intermediaries or a centralized authority, such as a national land registry.

Blockchain can thus theoretically store all relevant information on properties, buyers, and sellers, thereby streamlining many of the largely manual steps that are used to establish the trust needed to facilitate property transactions. These include contracts with real estate agents, verifying information with the land registry, establishing credit assessments and loan commitments, as well as a range of inspections on the property and buyer. With blockchain, participants can see changes to the ledger, access its records in real-time, and be confident in the indisputability of the information. These fundamental properties make blockchain technology an ideal fit for land and property registration use cases.

Key benefits for using blockchain in such applications include:

  • Accelerated Process: A blockchain-based land registry platform can offer a distributed database that anyone can record and access information without the involvement of any centralized authority, thus eliminating the need for third-party centralized verification.
  • Reducing Fraud Cases: By keeping an immutable record of transactions, blockchain can prove ownership of the land title and prevent forgery of documents.
  • Bringing Transparency with Smart Contracts: Smart contracts can make the process simpler by automating verified transactions and doing so would make ownership transfer seamless and quicker than the traditional method.

Key Stakeholders involved in a representative Blockchain Land Registry Platform are:

  1. Buyer: A person who buys the land and uses the platform to search the property, request access and interact with the seller and get the land title ownership.
  2. Seller: A person who sells the land and uses the platform to manage properties and transfer land title to buyers.
  3. Land inspector: A person who uses the platform to manage property requests, view reports, confirm and initiate the transfer.

A representative structure and process flow for a blockchain based land registry platform is provided below:

  • Step 1: Users register to the platform – Users – both buyers and sellers – register to the blockchain platform. They can create the profile with details like name, ID proofs and designation. A hash for the user information gets stored on the blockchain.
  • Step 2: Sellers upload the property specifications – Sellers can upload properties’ location, images and documents on the platform. The transaction corresponding to the seller’s action is recorded on the blockchain.
  • Step 3: Buyers request access to view the data of the listed property – A buyer interested in any specific property can send a request to access its specification. Sellers can either deny or accept it by looking at the buyer’s profile. Buyers can view the previous ownership records of the property and send a request to purchase it and initiate the transfer.
  • Step 4: Sellers approve the transfer request, and land inspector gets a notification: If the seller approves the land ownership transfer request, the land inspector gets the notification to initiate the transfer of property. Smart contracts trigger to provide access to the land inspector.
  • Step 5: Land Inspector verifies the transaction and initiates the transfer: Land inspector verifies the documents submitted by buyers and sellers and adds the authenticated records to the blockchain land registry The signed document gets saved in the database and transaction corresponding to it is recorded on the blockchain.
  • Step 6: Land Registry Document Validation: In case of any disputes, any authorized party can upload the signed land registry document on the platform to check its authenticity and validate it.

Countries around the world have already begin to introduce blockchain in land registry systems:

  • United States – In states like Vermont and Wyoming, officials announced blockchain initiatives aimed at piloting real estate transfers and shifting land records to a blockchain platform.
  • Netherlands – The Netherland’s Land Registry Enterprise Architect announced progress in integrating a blockchain solution into the country’s land registry ecosystem. The Netherlands was one of 22 EU members that signed a declaration to develop a European Blockchain Partnership.
  • UK – The UK’s land registry released a statement about a partnership aimed at simplifying the growing land registry issues with blockchain technologies.
  • Sweden – The Swedish Land Ownership Authority announced it has reached the final stages of testing of the two-year long blockchain land registry research program.
  • Other countries that have used land registry blockchain systems are Brazil, India, Russia, and Ukraine. In India, the state of Andhra Pradesh has used blockchain for a land registry pilot to track the ownership of property.

Despite the promise of blockchain for land and property registry, there are several fundamental challenges for its implementation globally. In particular, it is critical to cut out registry errors, fraud, and corruption to ensure data recorded on blockchain is itself accurate and indisputable. Most developing countries still operate with paper-based public registers that are largely incomplete, leaving significant challenges during the process of digitizing and updating records. As many governments, particularly in developing countries, continue to grapple with land governance and administration challenges, including the digitization of their registries, blockchain is still a long way from being implemented at scale.

However, there may be more potential to pilot initiatives in smaller sub-areas like districts and counties where governments have been able to establish a strong record of land titles. Moreover, the advent of new advanced technologies – such as satellite imagery, GPS, aerial imaging, and machine learning – are increasingly offering new possibilities for digital land records to be completed at large-scale and low-cost in developing countries. These technologies could play a highly complementary role to establishing blockchain registries in the near future, and help transition to a more efficient and less fraud-prone land and property registry process.

Note: This is a Guest post by Anurag Chaudhry.

Post your comment...
Anurag Chaudhuri 1 Article
Anurag/Andy Chaudhuri is the Founder and CEO at White Code Labs - a leading software development company with experience in cyber-security, network security, and blockchain. For his work at White Code Labs, he has been featured alongside leading technology companies like Amazon, Microsoft, IBM and Oracle. At White Code Labs, Anurag has developed and led complex large-scale, projects for leading credit unions and community banks, and state and local organizations such as San Francisco Public Works, San Diego State University, and San Jose State University. Anurag has also created several applications including a location-saving and sharing mobile application; as well as a blockchain-based live video streaming platform built on the Ethereum blockchain. Previously, he was at Usablenet - a leading global software services provider to Fortune 500 companies - where he led projects across airlines, banks, and retail sectors. He is a graduate of DePauw University, has a Masters in Information Technology from the University of Redlands, and a Masters in Software Engineering from Pennsylvania State University.
Follow Anurag @