4 months ago- Georgia -
Blockchain Land Titling
In April of 2016 Georgia became the first country in the world to have land registration backed by blockchain technology. The titling system was developed by the Bitfury, a company known for crypto-mining but has since diversified their portfolio into hardware. The move from the Georgian government was the first of a global wave of blockchain incorporated government infrastructure, within a period of two years Switzerland, Sweden and Estonia began to jump on the blockchain bandwagon. It makes sense, blockchain guarantees transparency and integrity to fight a system of corruption that costs the global economy nearly $2 trillion annually.
Bitfury developed the land registry platform in close proximity with the National Agency of Public Registry (NAPR). Together they aimed to boost estate title transparency, reduce the prevalence of fraud, increase security, reduce registration fees and increase flexibility for people to buy and sell property. The project was assisted by Hernando de Soto. A Peruvian economist and president of the Institute for Liberty and Democracy, a Lima-based think tank devoted to the promotion of property rights in developing countries, de Soto has been a long proponent of land titling.
Land titling is the process by which individual or families are given formal property rights for land which they had previously occupied informally or used on the basis of customary land tenure (owned by indigenous communities in accordance to their customs). Advocats of the policy argue that legitimized possession of land will enjoy better incentives to invest and can use these real assets as collateral for credit. It was been suggested that land titling creates greater gender equality and even strengthens democracy. Despite the benefits of land titling, The World Bank estimates that over 70% of the global population still lacks access to proper land titling or demarcation.
The requirement for formalized land titles was highlighted in 2015 when residents of Sno Valley became aware of the Ministry of Energy's intention to build a powerline through the middle of four villages. As it became know that landowners would be compensated for giving up land, 200 plots of land were registered by residents. Boundaries were undefined in original documents, colloquially known as ‘Shevardnadze Passports’, as they were issued during the post-Soviet presidency of Eduard Shevardnadze. As documentation was incorrect or incomplete, a representative of the NAPR was sent to check the sites. This representative was local resident Elberdi Papiashvili, who is often unable to confirm ownership and has to rely on testimonials of witnesses, witnesses are often neighbors, neighbours are often close relatives of the applicant. Clearly this process lacks a certain level of legitimacy. To read a fantastic recount of this whole episode, definitely check out Nino Abdaladze and Nanuka Bregadze’s article on ifact.ge.
While the benefit of immutable land registry records are clear in the case above, there is a lack of online evidence to suggest Bitfury’s blockchain approach to land titling was to enable the vulnerable and indigent formal ownership of land they have been occupying informally. With the involvement of de Soto this seems like an unlikely oversight and perhaps has been left from online publication. So to preface, I may be mistaken, but I will state my reasoning to why this is perhaps the greatest benefit to a streamlined and public land titling project anyway.
Within Georgia, there are a substantial amount of vulnerable people set to benefit from land titling; destitute individuals living in makeshift homes or abandoned buildings and families left without land titles after the breakup of the Soviet Union. Despite the amount of people that are victim to these circumstances, Bitfury’s blockchain land titling project does not seem to be aimed at them (at least it’s hard to find conclusive links or stated intentions of Bitfury’s project and goal; inexpensive and a frictionless process of land registration with blockchain tech, to benefit these citizens, even indirectly). Communism saw social equality achievable through an elimination of private property, it seems superfluous say that this system didn’t work. A country without a formal system of registering property has limited economic development and prevents its citizens from realizing their full potential. Georgia has recently (historically speaking) been released from communism and now has the means to empower its citizens with the ownership of property, it would be a terrible shame not to utilize this power.
Throughout his career, de Soto has championed this empowerment of people, and perhaps it is Bitfury’s intention also. As quoted in a Forbes article, the project of land titling, Valery Vavilov, CEO of Bitfury, stated has personal meaning for him “I was born and grew up in Latvia, which was part of the Soviet Union, but is now part of the EU. When the Soviet Union collapsed, my parents lost everything because the money literally became paper,” he said. “This technology can really save people’s assets, which is especially for property rights registration in emerging markets.”
In December of last year, Marc Taverner of Bitfury spoke at Legal Tech of Future Law in Vienna, he stated “There are now 300,000 land titles on Georgia’s Blockchain. So if a neighbor decides to take away Georgia’s land, then the international legal claims will be preserved. Thanks to the Blockchain.” Taverner was alluding to the threat of Russian invasion, and perhaps specifically to the annexing of South Ossetia and Abkhazia, and the creeping borders swallowing Georgia towns. The argument goes that ownership creates security, especially useful when you have aggressive neighbours.
Whether or not Bitfury’s land titling project is completely true as an act of land reform, it’s no small achievement to apply blockchain technology to the once bureaucratic and opaque process of land registration in Georgia. An outdated and broken system has now become transparent, secure, cheap and fast. Blockchain has enormous potential for the procurement of property rights, when ensured property rights, individuals benefit from prosperity, freedom and ownership of wealth.