Blockchain, land rights and corruption
10 May 2016 by Marketing Team
Since its creation in 2009, Bitcoin a digital currency secured by encryption has raised interest and controversy. More recently, the application of the technology that underpins it known as ‘blockchain’ has received media attention because it could be used to enhance transparency, accountability and integrity. One example is the way in which its public and tamper-proof data storage function could improve the registration of land titles in countries where registries are fraught with corruption and lack proper governance mechanisms.
In Kenya for instance, the protection of land rights is contentious and tenuous. In a country where land symbolises wealth, security and power, inheritance of land leave many vulnerable to exploitation and displacement in situations where land has no title documents. Kenya’s history is rooted in violence around longstanding conflict between land, power and politics. While the Land Registry is infamous for tampering with title documents, issuing double title deeds (known as duplicate titles) leaving rightful owners with little or no recourse when their properties are involved in conveyancing transactions without their knowledge, government officials are known to illegally amend and transfer titles either to themselves or to others for bribes. The Land Registry is fraught with bureaucracy and inefficiency and accessing proper information or records is almost impossible.
The development economist Henando de soto suggested that the registration of digital versions of title deeds into a block chain (like Bitcoin) could be a possible solution. The paper-based processes could be replaced by blockchain technology which would enable registries to record data digitally on the titles ensuring that the information could not be either duplicated or tampered with and this would improve overall transparency and reduce the opportunities for corruption.
There are however several challenges to this technology:
- It relies on the accurate input of data by a trusted intermediary to ensure that the blockchain records genuine and authentic information and data relating to the title.
- While the blockchain ledger could increase transparency of the title documents in terms of providing a record of data relating to previous transactions, it could not identify any corruption underpinning them such as how the property was registered in the public ledger at the Registry in the first place. Additionally, the technology does not prevent individuals from using corruption to create the transfers.
- It is likely that the technology will be resisted by countries where the elite benefit from a lack of transparency.
- There could also be a time lag between practical implementation of the technology and policy regulations to administer its use.
In theory, whilst block chain appears to be an attractive way to overhaul and transform land registration systems fraught with corruption, in reality, greed, power and politics could prevent this improvement in governance.
Do not hesitate to contact our residential or commercial property departments for any advice you require in relation to your property.