Constraints and benefits of the blockchain use for real estate and property rights

Publication Date06 Jun 2020
DOIhttps://doi.org/10.1108/JPPEL-12-2019-0061
Pages109-127
AuthorOleksii Konashevych
SubjectProperty management & built environment,Building & construction,Building & construction law,Real estate & property,Property law
Constraints and benets of the
blockchain use for real estate and
property rights
Oleksii Konashevych
Erasmus Mundus Joint International Doctoral Fellow in Law,
Science and Technology, Research Centre of History of Law,
Philosophyand Sociology of Law, Computer Scienceand Law,
University of Bologna
Abstract
Purpose Many recent social media posts and news may create a perception of big success in the use of
blockchain for the real estate industry, land registration and protection of titles and property rights. A
sobering outlook is crucial because misleading concepts may bury the whole idea of blockchain use. This
paper aims to research the possibilities of blockchain and other distributed ledger technologies (DLT) and
applicabilityof these technologies for different purposes in real estate,property rights and public registries.
Design/methodology/approach This research is framedwith policy studies and focuses on property
rights, land registrationregulatory framework and information and communicationtechnologies innovations.
The context ofthis paper is decentralization which has been developedin political science studies and the role
of blockchain and DLT in it. Therefore, the provided analysis of blockchain and DLT is interdisciplinary
researchto interpret the facets of DLT technologies in the contextof real estate and land title registration.
Findings Permissioned and privateDLT systems cannot be considered a signicant evolutionary step in
government systems.Blockchain, which is distinguished from permissioned systems as the technologyof the
immutable ledger that does not requireauthorities, is a new word in governance. However, this technology
has some principal features that can restrain its implementation atthe state level and thus require further
research and development. The application of blockchain requires a proper architecture of overlaid
technologiesto support changes of outdated and mistaken data, addressissues of digital identity and privacy,
legal complianceand enforceability of smart contracts and scalabilityof the ledger.
Originality/value This paper shows the constraints of the technologys properties which were not
explainedbefore in the context of title rights andland registration even though technologicallimits are known
in more specic technical sources. Along with the known benets this meant to help to avoid
misinterpretation of some DLT featuresby non-technical people. A multidisciplinary approach in analyzing
the technology and laws helped to better understand what can and cannotbe benecial for public registries
and the protection of property rights. The presented outcomes can be laid down as requirements for the
technical protocolsaimed at addressing the issues of DLT and public policiesto put blockchain at the service
of society.
Keywords Real estate, Blockchain, Property rights, Smart contracts, Distributed ledger technology,
Land registry
Paper type Research paper
This paper is an outcome of the PhD research performed inside of the Joint International Doctoral
(PhD) Degree in Law, Science and Technology, coordinated by the University of Bologna (CIRSFID)
in cooperation with the University of Turin, Universitat Autònoma de Barcelona, Tilburg University,
Mykolas Romeris University, The University of Luxembourg. The author is grateful to RMIT
University and the team of Blockchain Innovation Hub for the seminal collaboration. Thanks to
supervisors Professor Marta Poblet Balcell, RMIT University (Melbourne, Australia) and Professor
Pompeu Casanovas Romeu, La Trobe University (Melbourne, Australia).
Blockchain use
for real estate
109
Received31 December 2019
Revised11 February 2020
Accepted1 April 2020
Journalof Property, Planning and
EnvironmentalLaw
Vol.12 No. 2, 2020
pp. 109-127
© Emerald Publishing Limited
2514-9407
DOI 10.1108/JPPEL-12-2019-0061
The current issue and full text archive of this journal is available on Emerald Insight at:
https://www.emerald.com/insight/2514-9407.htm
1. Introduction
Blockchain and other distributed ledger technologies (DLT) drew the attention of the real
estate industry and governments. This research shows that there are no outstanding
examples of success in the utilization of this technology in real estate and property
registries. Therefore, this paper provides analysis and discusses the use of blockchain in
addressing misconceptionsand myths in this space.
The common feature of most of the projects is the idea of disrupting and decentralizing the
real estate industry, developing, or improving land registries on blockchain, applying smart
contracts and so on. None of the discussed examples however use public blockchains. This
analysis shows there are no benets in using centralized (permissioned) DLTs for the public
sector. At least, there is no justication found among such projects as to why certain centralized
solutions are better than those which government agencies have already used for decades to
run public registries. Inconsistency of ideas of decentralization and their implementation is a
result of a lack of research and understanding of the technologys capabilities.
Even more alarming is a tendencyfor politicians and some startups to mislead society in
their intentions to introduce any decentralized solution titling their technologies
permissionedor privateblockchains. The word blockchainis expected to correspond
with inherent features of Nakamotosinvention uncensored and public technology with an
immutable ledger, withno dedicated trusted third party to conduct the system and provide a
single source of truth for the state of transactions.
Sections 2 and 3 explore the constraints of the technology and its applicability to
property rights and land registrationissues.
Section 2 discusses the general ideas of blockchain use and decentralization, specically, public
ledger versus private/permissioned. The next section provides the analysis of issues in using public
and private DLTs and some misconceptions. The fourth section shows some projects in the Republic
of Georgia, Sweden, Ghana, The Netherlands, the USA and some other places and discusses
practical issues that they encounter. The analysis shows that it is too early to make conclusions
about these projects or at least they are not as enthusiastic as the perception media may have created.
The cases should be further observed and scrutinized for an unambiguous assessment.
The conclusion summarizes ideas on the applicability and benets of the technology in
public services, particularlyland cadasters and other property registries.
The value of this research is that it presents a systematic approach in the analysis of the
use of blockchain for property rights and public services, considering that there is a lot of
speculative andmisleading information in media.
This paper contains a lot of technical discussionsinterpreted and summarized for a wide
range of readers to ll a gap in the understandingof DLT and blockchain.
1.1 Theoretical framework and methodology
This research is framed with policy studies and focuses on property rights, regulatory
framework of land registration and information and communication technologies (ICT)
innovations. The context of this paper is decentralization which has been developed in
political science studies and the role of blockchain and DLT in it. The provided analysis of
blockchain and DLT is an interdisciplinaryresearch.
This paper is draws conclusionsfrom different sources:
technical reports and white papers of projects, such as Bitcoin, Ethereum and Emercoin;
academic papers; and
technical analysis from forums and open industry platforms, mainly Bitcointalk and
GitHub.
JPPEL
12,2
110

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT