Blockchain has creates a new framework for transactions without intermediate. In this work, we discuss about benefits of applying blockchain for land registry. We also propose a blockchain-based architecture for developing applications for land registry in the future.
Real estate transactions currently depend on a number of intermediaries, including brokers, government property databases, title companies, escrow companies, attorneys, inspectors, appraisers, and notaries. In addition, there are many time-consuming, expensive functions such as payments of rent, deposits, and fees. It usually takes a long time from when the purchasing contract is signed until the bill of sale is signed and the actual transfer of the property takes place.
The use of blockchain in land registry is mainly being in search for its potential to enable a transfer of property securely and faster.
Bitcoin was first introduced in 2009 by Satoshi Nakamoto. In his paper, Nakamoto introduced the first algorithm that allowed financial transactions to be done between peers without the need of a trust third party. Its underline technique was known as blockchain. Because it is decentralized, fault tolerant, and virtually immutable, blockchain offers security and resilience advantages over traditional ransaction and record keeping systems. Records could be more resilient, as there would be no single, centralized repository vulnerable to destruction.
The benefits of using blockchain in land registry
A purchasing contract for a real estate transaction that is scanned and produce a corresponding digital fingerprint. The fingerprint that is created from the document is unique. Hashes are saved into the blockchain. By storing these hashes on a blockchain, they can be verified independently records of the existence of the documents. In other words, documents has been virtually notarized and recorded.
Many time-consuming, expensive functions can be replaced with blockchain and smart contracts. Payments of rent, deposits, and fees could be automated. Escrow accounts could be redesigned around smart contracts and multisig wallets. Blockchain-based registries could allow peer-to-peer asset transfers, reducing transaction times from months or weeks to minutes. Transaction costs could come down from thousands of dollars per sale to a modest service fee.
A future architecture for blockchain-based land registry
Identity: Validating identity of someone who is the owner of the asset is critical.
Digitized and hashed documents: All related documents must be digitized and hashed. Everyone is ensured to have the same copy in the same format of documents.
MultisigWallet: These wallets require verification by a minimum number of keys, rather than a single key, before a transaction is completed. Instead of a seller simply transfer assets, a registry configuration could require both a seller and a banker to sign off on the transaction. Multisig can be configured in any number of ways, requiring, for example, two of two, two of three, or three of five designated signers.
Escrow: a deposit of funds, a deed or other instrument by one party for the delivery to another party upon completion of a particular condition or event.