Blockchain and property rights

Phil Gramm and Hernando de Soto write,

Fortunately there is a new technology that could make a global property-rights registration system feasible. Patrick Byrne, an e-commerce pioneer and the CEO of Overstock.com, has committed a professional staff and significant resources to modernizing the collection and maintenance of property-rights records on a global scale. Blockchain is an especially promising technology because of its record-keeping capacity, its ability to provide access to millions of users, and the fact that it can be constantly updated as property ownership changes hands.

I am not persuaded. Information technology can be used to track property rights, but that is not the problem in underdeveloped countries. The problem is to establish property rights in the first place. You can use data to identify a parcel of land. But data alone does not tell you who owns it. Ownership is a social construct.

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11 Responses to Blockchain and property rights

  1. Handle says:

    It’s not about recording. Blockchains are all about situations where one cannot (or does not want to) trust or rely upon some central entity to keep and provide good records. Sure you can keep title records at the courthouse. But what do you do if the equivalent of the county recorder acts in a corrupt manner and modifies the records? Maybe you lost your paper deed in a flood and now the manipulated records say a quarter of your land belongs to your neighbor, or someone else entirely? What if the recorded of deeds doesn’t even let you see the records without paying exorbitant fees? What if the intermediary which makes transactions “official” is being threatened and refuses to cooperate?

    Blockchains are a way to circumvent or avoid all these issues, and to eliminate the incentive for this kind of bad behavior, by recording and (cheaply, conveniently) publicly providing accurate data that is impracticable to modify. There are also other problems – what happens if you lose your private key or someone steals it – but these are of a different character.

    • Arnold Kling says:

      If the people keeping the records are that corrupt, then the people that you need to enforce your property rights are going to be corrupt, also. If you don’t have a government that is willing and able to enforce property rights, then blockchain is not going to help you.

      • Thomas Boyle says:

        Not necessarily true – this is the point of having “checks and balances”. The land record keeper may be a relatively obscure local official. The enforcer of contracts is likely to be someone else, quite possibly from a different branch or level of government. While both may be corrupt, it is at least possible that one is not. If the record keeper is not corrupt, you’re good. If the record keeper is corrupt, but you have verifiable records and the enforcer of contracts is not corrupt (or not beholden to the same clients), you’re still good.

        If you’re trying to attack low-level corruption from the top, a set of verifiable record-keeping systems could be a valuable asset.

    • Jay says:

      Suppose the authorities simply neglect to post a year’s worth of lawful transactions to the blockchain? Or perhaps a bunch of heirs have legal wills to their various properties, but the “bitcoins” went to the grave with the previous owners. The blockchain is no longer a reliable record of who owns what property, and thus becomes useless.

      • Jay says:

        What I’m trying to say is that failing to properly modify data can be an effective attack, against which blockchains offer no defense.

        • Thomas Boyle says:

          For every solution to the problem, there is likely to be a way to commit fraud. But, the fraud gets harder to commit. The blockchain is a public record, and escrow isn’t going to close (for example) unless the blockchain gets updated. Fraud would more likely have to involve posting a fraudulent land transfer to the blockchain. So, certainly, there need to be identity validations recorded as well, to ensure that fraudulent actors can subsequently be identified. Yes, someone can fake an identity – the fraud gets harder, but – with enough resources – not impossible.

  2. Jesse says:

    Would a blockchain proprty register mean that if your phone gets hacked someone coukd irrevocably transfer your proprty, or if you loose your key your proprty is effectively abandoned?

    • Thomas Boyle says:

      Not necessarily. The “key” need not be a token stored on a phone; it might be an identity validation system. Today we require that the vendor not only establish title, but also that they are, in fact, the person listed on the title. That’s the “key”.
      Of course, a non-technology “key” is subject to fraudulent attack – someone who, with the collusion of the identity validators, claims to be the vendor. But, that’s already a potential problem everywhere, and there are fairly robust solutions to it.

  3. Matthew Young says:

    Spectre, the recent processor ‘bug’ establishes property rights because we can now extend our property rights into the monetary network via secure trading protocols that are guaranteed counterfeit proof.

    They had the right idea, wrong theory. I is about ‘flowing’ property rights across the monetary network, it was always about that, even when the internet was made of impressions in a mud slat 10,000 years ago.

    • Matthew Young says:

      I should explain this.
      Prior to a few weeks ago the banking law implied the bank took your money as legal owners, they rented it with soe contractual restrictions.

      Nomore. The client keeps ownership of the digital assets until there is a transaction. Banks and exchanges only keep an account to cover market making risk, everything else is taken off the table (kept in the hands of the original owner) as soon as the market clears.

      All transaction are done by your trading protocol, which is mobile and is legally your authorization to engage in automatic trading. Thus, instability is defined as a counterfeit processor, this was the spectre result.

      • Matthew Young says:

        Sorry, this is an important distinction.
        Consider opening a traditional bank account, in person, at the bank. You get prequalified to use on line account swaps. You can sit at your computer and trade for stocks or Walmart goods. Great.

        Who is really doing the transactions? A bit of javascript code, and you monitor and verify its function as it operates. Now add spectre, you do not need to verify the javascript, the processor is doing it for you, and protecting your keys.

        This is why they raided that crypto banke, Arise, in Texas recently. Arise no longer needs an entry point into the traditional banks, each of the Arise client need only put their traditional account under robotic control, with stable, known protocols backed by contract law. No central bank cooperation is ever needed again, we can make a digital mobile asset out of anything you own as long as you thumbprint the agreement.
        This is the spectre result. Over the last three weeks out entire property system became liberated, mobile. We only need a high school kid and javascript. Anyone is free to market a monetary system of their own design (blockchain or otherwise) and they have equal access to the same technical means as the Fed.

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