Alex Batlin’s Cryptocurrency 2.0 Musings – Land Registry

Alex Batlin mentioned the infrastructure of Bitcoin and blockchain in his other two articles, describing how it works as a payment model in a complex regulatory world. Here, he mentioned the practical applications of Bitcoin and blockchain, and how blockchain can solve the privatization of land registration in the application. Here are Alex's views on land registration:

Privatization of land registry

The Guardian article on Land Registry facing privatisation explores concerns about the privatisation of the Land Registry, a national institution that has seen 24m land titles privatised in England and Wales after 150 years:

1. Profit motives and conflicts of interest can cause damage to credit records and access records.

2. Some fees may increase, which means the public may lose free access to some data.

3. Who will ensure that your privacy is not sold to a third party who wants to sell your stone siding or fill in your driveway?

4. Do we really want to rely on the private sector to protect the most valuable asset for most people, privacy?

5. Partial privatization could cast a shadow on open data on land property ownership.

In short, it’s a question of trust in a single private institution to manage the ledger of asset ownership. It sounds like the same problem Bitcoin solved for money. Startups like Chromaway and Factom agree, proposing how blockchain technology could be applied to land registries.

Real Estate Asset Blockchain – A Self-Sustaining Business Model

The beauty of using blockchain for land registries is that it is a natural fit for a self-sustaining business model. If you care about open data, data trustworthiness, or want to perform analytics on the data, then you can become a full node or miner and collect fees from transaction validation and gate access and those who don't want to run a full node. If you are a casual user, then you don't mind paying a small fee to the gate, and any gate provider that charges too much will have market forces push others to become full nodes and offer competitive gate fees.

Land registration is only part of the overall real estate transaction, which is complex, slow and expensive, especially for chained real estate (this is a real estate, not a chain). Because of the large amount of money involved, everyone needs to conduct sufficient due diligence. For example, buyers and lenders need valuation investigations, buyers and lenders require land registration, local councils, drainage and water, bankruptcy, environment, planning, coal, tin and other mining, flood risk, channel and other searches and property investigations, and lenders need to perform borrower credit checks. All these searches and investigations require open and trusted data sources, that is, the same setting requirements for land registration. Therefore, blockchain becomes a candidate to guarantee these investigations.

Not only do you need trusted data sources, you also need lifecycle events like transfers that have a trust component. Before completing the legal contract for the transfer of ownership, both parties often pay a deposit to be held in escrow by a lawyer, which is then forfeited if one party backs out of the deal. Once contracts are exchanged, the mortgage lender may require insurance before the deal is completed. The lawyer will also ensure that title is only transferred when there is a mortgage security in the way, that if the money is transferred from the lender, the deposit and buyer's accounts have been successfully completed with the current seller, and that it is likely that their loan account and all third-party fees and taxes such as stamp duty have also been paid. In some countries, you will also need to confirm all loan contracts with third parties.

This is the classic touchpoint area for smart contracts, as they can autonomously custody assets for their own accounts and self-issue them under certain conditions, i.e., guarantee the transfer of ownership and corresponding payments like atomic swaps. We have seen companies like Circle obtain e-money licenses, so it is possible to custody paper money on the blockchain, and if ownership is blockchained, then such solutions become feasible. In other words, they can be trusted to perform business processes throughout the life cycle. I do not believe that any single proprietary system will gain the trust of all parties who are opposed to privatizing land registries for various reasons. In my opinion, an open, mutual, neutral, open solution like blockchain alleviates my concerns on the other hand.

Blockchain apps create a new style of real estate buying

There is also a possibility here to improve the entire user experience. Imagine if future buyers install an app on their phone and define the area and type of property they are interested in.

• As they walk, the app notifies them of two close matching properties that look similar, but one has the latest search and investigation with all blockchain confirmations, so choosing this one has better purchase security.

• They press a button and through the distributed marketplace, the prospect is matched with a corresponding real estate agent based on their reputation. The prospect selects the primary agent and checks immediately to see if it is available, and if so, especially if the property is equipped with smart locks, they also need to take a look.

• On the blockchain, prospects may already have pre-arranged collateral and off-chain certification of property to provide them with instant verification of the bargaining power of suppliers as part of their bid, and when appropriate, the blockchain can even manage a sealed bidding process.

• Once they win the bid, the AI-assisted lawyers (or think of them as Bionic Lawyers as I do) conduct a reputation-based selection of the allocated market, performing a final due diligence on the search and investigation results. If everything is OK, the blockchain smart contract executes the steps of the goods transfer and tax payment, as well as reprogramming the smart locks to work only for the new owner!

Today, the entire process takes days instead of months, and the fees are broken down. It can also be programmed to have property chain purchase/sale conditions. Wow, I wish I had this program when I last bought a house.

Bitcoin is becoming a payment method in blockchain programs

It is important to note that many people use the Bitcoin blockchain and overlay protocols like Colored Coins and Open Assets to manage fiat and proprietary assets. This is very smart because Bitcoin is the most secure network at this point. However, there are still some problems. First, Bitcoin only supports simple smart contracts. Companies like Counterparty and Rootstock are trying to implement the Bitcoin blockchain in conjunction with the EVM.

The bigger problem is that Bitcoin miners don’t need access to transaction data to mine, all they need to do is guess the number attached to the block’s hash. This means you may have more ASICs to mine (some estimates as many as 100,000), which is relatively affordable to run compared to full nodes (as of today, there are about 6,970), which are expensive to run, but the opposite is true for data centralization. We try to avoid data centralization issues because protocols like Ethereum require the processing units doing the proofreading to have the blockchain data in order to guess the value.

Alex Batlin

Original article: http://fintechnews.ch/3308/blockchain_bitcoin/crypto-2-0-musings-land-registry/
By Alex Batlin
Translator: Wang Er
BTC address: 16enj2bapYdzPfa2DWSVaT1g95MCXg2hHt
Editor: Kyle
Source (translation): Babbitt Information (http://www.8btc.com/crypto-2-0-musings-land-registry‎)