Blockchain and Bitcoin applied to the Land Administration

At a technologies information Congress, I was approached by a magazine’s publisher. He consulted me on this type of technology implementation in the land registry, cadastre and property management areas in general. The conversation was more than interesting, although I was a little surprised about his questions, considering that a couple of months ago, his magazine had made the publication about a tropical american country which was implementing it. I assumed that it was only a press release, where in which they had missed the opportunity to ask for more details from the original source.

The truth is that viral ability that #blockchain and #bitcoin acronyms have is little less than surprising, not only because they have great promoters in different social strata, but because it is also irreversible to decouple these technologies philosophy in the transactions near future between third parties. In this article, I summarize the main aspects of a heated night with pleasant company between amaretos while we were at a live music restaurant navigating along a river.

What Blockchain is

blockchain administracion de tierrasBlockchain is a technology for data storage in a securitized cloud. Chains and nodes store associated operations with the initially created object, almost impossible to violate.

This technology application in the land administration field, allows the transactional process encryption through concatenated blocks in a cloud. In a Property and Notaries record case, the chain not only constitutes the successive tract but the operation sensitive details on the property (appraisal, improvements, sales, mortgages, surveys, assessments, geo-referenced, etc.) in a encrypted storage cloud.

What Bitcoin is

bitcoin hondurasBitcoin is a technology for managing electronic money between third parties. Technology convert money values from the formal market in cryptographic money which can be used for purchases between third parties with rates less than the formal marketplace. The Coin units are a type of electronic exchange that uses BlockChain chains for the veracity guarantee.

This technology application in land administration, involves the conversion of a property title to Coin units, in order to turn it into a value title. Under these conditions, once registered the title, is encrypted through BlockChain and then converted into a value title using Bitcoin, it can be transferred between third parties without so many middlemen.

Spatial smoke or reality?

In this issue there are many confusions, because they have sold more edges than gradual processes that could become in a time gap that not only depends on technological aspects but rather on policies and legal norms. So, after the second Amareto, the first step was to open our minds and imagine what would happen if we think of today from now to 25 years, while girls who accompanied us just halfway arrived through their first Margarita and came back viewing us with an interest face for not showing their total clichés ignorance of what we, obsessive geosmokers, are used to.

The most easy theme is to apply Blockchain as technology, considering the given capacity to a transactional system so as to increase the information security. It is all what they want, instead of having a tabular database that can be violated, these can be within a cloud where it is impossible to build a string from links contained in a fragmented sequence that cannot be broken and barely understand. This could both be applied to the property registration, where the property current conditions are included in the chain: the parties concerned in the transaction (owner, notary, surveyor, Bank, etc.), the relationship with the good (law, restrictions, responsibilities), the law object which may be material or intangible (such as intellectual property or a commercial property in shares), its geometry reference and above all the heart of LADM model, the source… all in a sequence of non-continuous blocks in a cord similar to the DNA strand.

That’s not smoking, that technology already exists and is documented to be applied in other fields.

Of course, Blockchain is just a technology, they are not tools ready for use; a system should always be developed or be applied to an existing one with the simple condition in the contract technical specifications indicating that the company should apply Blockchain technologies and of course, the human resource ability that will perform QA and will allocate – at least to half understand how it became-. The problem is, that part of this technology sale is to believe that once applied Blockchain, it is no longer needed a professional to perform a transaction. But we have to apply an open mind and think of this:

What happens if we walk with local currency paper money, equivalent to $10?

-Is mine, so I can go up into a taxi and pay with it, then I can go to a store and buy a minutes card for my cell phone. Depending on which city I am it is possible to buy a PayPal card balance or send money by the mobile phone without needing to verify its authenticity.

Si fuera de 100 dólares podría comprarme un teléfono móvil y por mucho en la tienda verificarían que es válido, con una máquina hecha para validar la autenticidad.

If it were a $ 100 money paper I could buy for me a mobile phone and as much the shop assistants could verify that it is valid, with a machine made to validate the authenticity.

5,000 years ago that was not possible to think of, since the exchange was of goods; so when changing a horse by a plot it was necessary to have a professional who knew about horses so as to ensure not only that it was healthy,and also a professional to see the parcel and ensure that his grandparents were the land owners, and perhaps another professional to write that operation in a book.

Buy and sell today can be very easily done, because the physical or electronic money is a transaction medium between third parties whose authenticity can be verified and is an accepted practice.

This is then when Bitcoin comes, since a property becomes in units of value, so as it is is a title value. Today  I can sell a stock title in a bar to my friend, by $2,000. If he wants to validate its authenticity he can do it, or can accept it in good faith because he knows me and is certainly sure where to find me if the document has a problem. So then a property title, once registered in a so encrypted, securitized and common use system, can be transferred between third parties and would not need an intermediary, if the owner knows that once in his hands is of his own and can transfer it  to another one or go to the Bank to deposit it using his name. Of course, it sounds like a smoke, but so might think the one who sold the Machpelah Cave to Abraham at the meander edges of the Jordan River.
bitcoin blockchain
So, Blockchain itself alone is nothing more than an already applicable technology, with all the advantages that we hope to get from it. Aware that the transaction between third parties cannot go beyond allowed legislation; it will continue existing the intermediary for transactions, because it does not change more than the security guarantee the existing system has. The Blockchain increases the legal certainty, but does not decrease transactional times if legal conditions to change a notarial system based on scriptures hinders it; neither it diminishes transaction costs if the technological tool has limitations to incorporate in an agile way a Front Office available to the user or if the Internet penetration gap  in rural areas is still very wide, much less if the lawyers power over innovations is plated to typewriter protocol and courses / distances description is under the lawyer expertise.

However, Blockchain is a big step. Surely it will be the technology allowing one of my mentors dreams, expecting that in the Bank, the buyer and seller put their respective finger on the fingerprint reader and the sale is made. That is technologically feasible, but having the legal norms, the users confidence in the data and the conditions to change the people mentality… will take a heaven miracle or a Government with tyrant practice in at least 25 continuous years.

Bitcoin is the next step for the securitization and implementation of cryptographic currency. This will be what will reduce the number of intermediaries. But for that, there is much to travel; especially because it is an issue rather than technological, economical; so it requires local law and time which is what will enable users to understand and accept it. Not only intermediaries decrease is something that can be done without Bitcoin, as is doing this Central America country, but it is also delegating to banks the possibility of registering a mortgage, expand, or release it; an action a notary did like the old way, with papers in a beige folder; and of course, with a similar given delegation to a notary and responsibilities limitations between the client good faith, attorney faith and the public faith registration. From this to transform into values a good property, furniture, commercial or intellectual… there is still a long way.

But it will happen. To the extent that Factom and Epigraph may achieve visible projects, preferably not in the third world.

To be honest, I am being too simplistic because the boundary between Blockchain and Bitcoin is not as tacit as I put; It is possible to do much more only with Blockchain without having to resort to Bitcoin.

In the case of this Central American country referred to in the magazine article, what it has now is a pilot project, in which it is being tested the Blockchain technology. Safely in 4 years, it will be a proven fact that in technical specifications on the Records Unified System new version says that in non-functional characteristics the system should apply encryption technologies through chains and also securitization. Bitcoin is targeted by those of us who think that 25 years is short time.

At this point of the talk, that I’ve just summarized, the girls had turned westward their eyes with their second Margarita. They ended getting up to see the fireworks which were reflected in the Thames waters hinting the silhouette of their crotch… just when we started talking about how can be applied the Blockchain for the cadastre management which definitely would simplify the complex challenges of the massive cadastral survey and valuation based on market conditions.

blockchain bitcoin catastro registro
 

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