Constraints and Benefits of the Blockchain Use for Real Estate and Property Rights

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. The paper aims to research the possibilities of blockchain and other distributed ledger technologies (DLT) and applicability of these technologies for different purposes in real estate, property rights and public registries. Design/methodology/approach – This research is framed with policy studies and focuses on property rights, land registration regulatory framework and 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. Therefore, the provided analysis of blockchain and DLT is interdisciplinary research to interpret the facets of DLT technologies in the context of real estate and land title registration. Findings - Permissioned and private DLT systems cannot be considered a significant evolutionary step in government systems. Blockchain, which is distinguished from permissioned systems as the technology of the immutable ledger that does not require authorities, is a new word in governance. However, this technology has some principal features that can restrain its implementation at the state level, and thus require further research and development. The application of blockchain requires a proper architecture of overlaid technologies to support changes of outdated and mistaken data, address issues of digital identity and privacy, legal compliance and enforceability of smart contracts, hardforks and scalability of the ledger. Originality/value - This paper shows the constraints of the technology’s properties which were not explained before in the context of title rights and land registration even though technological limits are known in more specific technical sources. Along with the known benefits this meant to help to avoid misinterpretation of some DLT features by non-technical people. A multidisciplinary approach in analysing the technology and laws helped to better understand what can and cannot be beneficial for public registries and the protection of property rights. The presented outcomes can be laid down as requirements for the technical protocols aimed at addressing the issues of DLT and public policies to put blockchain at the service of society.