In a congress of information technologies I was approached by the editor of a magazine, who consulted me about the application of this type of technologies in the area of Land Registry, Cadastre and Property Administration in general. The conversation was more than interesting, although I was somewhat surprised that he asked me, considering that a couple of months in his magazine had made the publication about a country in the American tropics that was implementing it. I assumed it was just a press release, in which the opportunity to request more details from the original source had been wasted.
The truth is that the viral capacity of the acronyms #blockchain and #bitcoin is nothing short of amazing, not only because they have great promoters in different strata of social networks, but because it is also irreversible to separate the philosophy of these technologies in the future close of transactions between third parties. I summarize in this article the main aspects that pleasant companies heared that night of Amaretos in a restaurant with live music that sails along a river.
What is Blockchain
Blockchain is a technology for storing data in a securitized cloud. Chains and nodes store the operations associated with the initially created object, almost impossible to violate.
The application of this technology in the field of Land Administration, allows the encryption of the transaction process through concatenated blocks in a cloud. In case of a Property Registry and Notary, the chain not only constitutes the successive tract, but all the sensitive data of the operation on the property (appraisal, improvements, sales, mortgages, assessments, levies, georeferencing, etc.) in an encrypted storage cloud.
What is Bitcoin
Bitcoin is a technology for managing electronic money among third parties. The technology converts money values from the formal market into cryptographic money that can be used for purchases among third parties with rates lower than the formal market. The Coin Units are an electronic exchange rate that uses the chains of BlockChain for the guarantee of truthfulness.
The application of this technology in Land Administration, involves the conversion of a property title to Coin units, in order to convert it into a security title. Under these conditions, once the title is registered, it is encrypted by BlockChain and once it has been converted into a security through Bitcoin, it can be transferred between third parties without the need for so many intermediaries.
Space smoking or reality?
In this issue there are many confusions, because the extremes have been sold more than the gradual processes that could be reached 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 the mind and imagine what would happen if we think of the 25 years from now, while the girls who accompanied us barely reached the middle of their first daisy and saw us again with an interesting face so as not to show his total ignorance of clichés that we accustomed to the obsessive geofumados.
The easiest subject to apply is Blockchain as a technology, considering the capacity that gives a transactional system to increase the security of information. It is what everyone wants, that instead of having a tabular database that can be violated, they are inside a cloud where it is impossible to build a chain from links contained in a fragmented sequence that can not be broken and almost understand. This could apply both to the Property Registry, where the current conditions of the Property are included in the chain: the parties interested in the transaction (owner, notary, surveyor, bank, etc.), the relationship with the property (right, restrictions, responsibilities), the object of law that can be material or immaterial (such as an intellectual property or a commercial property in actions), its geometric reference and above all the center of the LADM model, the source ... everything, in a sequence of non-continuous blocks in a cord similar to the DNA chain.
That is not smoking, that technology already exists and is documented applying in other fields.
Of course, Blockchain is just a technology, they are not tools ready to be used; You should always develop a system or apply to an existing one, with the simple condition in the technical specifications of the contract that indicate that the company must apply Blockchain technologies and of course the human resource capacity that QA will perform and will appropriate -At least to understand half of how it was done-.
The problem is, that part of the sale of this technology is to believe that once applied Blockchain it stops being necessary a professional to make a transaction. But let's apply the open mind, and let's think about this:
What happens if we walk with a ticket in the local currency of my country, equivalent to 10 dollars?
-It's mine, I can get in a taxi and pay with the ticket, I can go to a store and buy a minute card for my mobile phone. Depending on which city I am in, I could buy a PayPal balance card or send money through my mobile phone without it being necessary to verify its authenticity.
If it were 100 dollars could buy a mobile phone and by the way in the store would verify that it is valid, with a machine made to validate authenticity.
5,000 ago years this was not possible to think, since the exchange was of goods, so when changing a horse for a plot it was necessary to have a professional who knew horses to ensure not only that he was healthy, a professional to see the plot and ensure that he knew that his grandparents were the owners, and perhaps another professional to write that operation in a book.
Buying and selling today can be done very easily, because physical or electronic money is a means of transaction between third parties whose authenticity can be verified and is an accepted practice.
This is when Bitcoin comes in, since a real estate becomes a unit of value, just as it is a security. Today I can sell a stock title to a friend in a bar, for 2,000 dollars. If he wants to validate the authenticity he can do it, or he can accept it in good faith if he knows me and knows where to find me if the document has a problem. So then, a property title, once registered in a system so encrypted, securitized and commonly used, be transferred between third parties would not occupy an intermediary, if the owner knows that once in their hands is yours and can transfer it to another more or go to the issuing bank to deposit it in your name. Of course, it sounds like smoke, but that's how they would think who sold the Cave of Macpela to Abraham on the banks of a meander of the Jordan River.
So, Blockchain alone is nothing more than an applicable technology already, with all the advantages that we hope to get out of it. Aware that the operation between third parties can not go beyond what the legislation allows; The intermediary for the transactions will continue to exist, because it does not change more than the security guarantee that the existing system has. The Blockchain increases legal security, but does not decrease the transactional times if the legal conditions to change a notarial system based on deeds hinders it; nor does it lower transaction costs if the technological tool has limitations to agilely incorporate a Front Office within reach of the user or if the Internet penetration gap in rural areas is still very wide, much less if the power of lawyers over the Innovations is plated to the protocol on the typewriter and the description of bearings / distances under the expertise of a lawyer.
However, Blockchain is a big step. Surely it will be the technology that will allow the dream of one of my mentors, who hopes that in the bank the buyer and seller put their finger on the fingerprint reader and make the purchase. Technologically that is feasible, but having the legal norms, the user's confidence in the data and the conditions to change the mentality of the people ... will occupy a miracle of heaven or a government with tyrant practices in at least 25 continuous years.
Bitcoin is the next step, for the securitization and application of cryptographic currency. This will be what will reduce the number of intermediaries. But for that, there is a long way to go; Especially because it is a more than technological issue, it is economic, it requires local legislation and time, which is what will allow users to understand and accept it. Reducing intermediaries is something that can be done without Bitcoin, just as that Central American country is not delegating to Banking the possibility of registering a mortgage, extending it or releasing it; action that an old-fashioned notary used to do, with papers in a yellowish folder; Of course, with a delegation similar to that granted to a notary and limitation of responsibilities between the good faith of the client, the notarial faith and the public record. From this to transform in values a real estate, furniture, commercial or intellectual ... missing a lot.
But it will happen. To the extent that Factom and Epigraph achieve visible projects, preferably not of the third world.
To be honest, I am being too simplistic because the boundary between Blockchain and Bitcoin is not so tacit; It is possible to do only with Blockchain much more without having to resort to Bitcoin.
In the case of this Central American country to which the journal article referred, what it has now is a pilot project, in which it is testing Blockchain technology. Surely in 4 years will be a proven fact about the new version of the Unified System of Records, which in its technical specifications say in the non-functional characteristics that the system must apply encryption technologies through chains and also securitization. Bitcoin is in the crosshairs of those of us who think 25 years is a short time.
At this point of the talk, which I have only summarized, the girls were turning their eyes with their second daisy. They ended up getting up to see the fireworks that were reflected in the waters of the Thames letting glimpse the silhouette of their crotches ... just when we started talking about how to apply the Blockchain for the management of the cadastre that would definitely simplify the most complex challenges of the massive cadastral survey and the appraisal based on market conditions.