How blockchain can be used to manage land titles

By Lumai Mubanga

Many underdeveloped countries have a huge challenge in accounting for the massive land they own. With millions of hectares of land available largely owned by the state, they lack the mechanism to properly manage, allocate and account for. In several countries especially in Africa, the central government shares land ownership with tradition or local chiefs. These too are as inefficient as central governments in managing land. Coupled with this is the inability by existing governments to build capacity in technological development that can minimize this challenge.

The problem that several underdeveloped countries face in managing land titles is a broken land titles system. Flawed paperwork, forged signatures, and unclear documents make it difficult to trace the ownership of land. In addition, it’s difficult for these governments to build infrastructure for each of their citizens. The pitfalls which keep a central organization from solving this problem are mistrust between citizens and these central parties. Corrupt officials are susceptible to bribes and have tampered records many times.

In addition, governments do not have the resources to oversee large projects when it does not bring in a substantial amount of revenue. In addition, most citizens do not trust non-governmental organizations either, making all centralized options infeasible.

With so much mistrust in central authorities, a decentralized approach to such national challenges becomes the only alternatives. What could be included in such a decentralized approach? Similar to Proof-of-existence, it is about tracking ownership of documentations. Simply, create an association between users and document hashes. By associating addresses to document hashes, users can provide digital signatures to prove ownership. This provides transparency and irreversibility since information about all document ownership is public on the blockchain. This also limits centralization because no single entity decides which person owns which titles.

Just like transferring bitcoin between users through UTXOs, there is simply transferring the land title through smart contracts as well. However, there’s a big precaution that needs to be taken into consideration that affects this blockchain, along with several others that link real-world information to digital information.

In the computer world, you may be familiar with the acronym “GIGO,” which means “Garbage In, Garbage Out.”  A blockchain is good at handling internal data through its public auditability, but it can’t reach into the real world and validate inputs. Outputted data is therefore as good as the inputted data. If the inputs from the real world are incorrect, then the output is also going to be incorrect.

However, as you may rightly guess, this drives us back towards centralization, since we need some trusted third party to serve the very purpose of inputting correct data and information into the blockchain whenever someone creates a land title.

This problem has yet to be solved. Georgia, Ukraine, and Sweden are a few of the major countries tackling decentralized land titles, and several companies are seeking to make decentralized oracle systems as well. Governments will need to invest a lot in land management and make huge policy changes to transfer land management to blockchain platforms.