Blockchain-Based Land Registers: A Law-and-Economics Perspective

Abstract

Both land registration and blockchains pursue the production of immutable information. Land registration is hence among the most often suggested use cases of the blockchain technology. However, only a very small number of successful large-scale applications exist in the wild. This chapter aims at explaining why this number is so low despite blockchain’s prima facie suitability for land registration. After laying technical and legal foundations, we argue that trading shares of real estate investment funds on a blockchain has little to do with land registration. This allows us to concentrate on the benefits that the blockchain technology may provide for land registration in a proper sense. We show that “anchoring” land registers in public blockchains by regularly writing hash values of their content in one or several of those blockchains can overcome lack of trust in the immutability of digitized land registers without affecting the latter’s rules and organization. In contrast, implementing the entire land registration system on a blockchain and change rules and governance accordingly may result in high efficiency and effectiveness. This may be a big leap forward for many jurisdictions. In jurisdictions with already well-functioning land registration systems, the gain from a transition to the blockchain technology tends to be small for both deeds recordation and title registration systems, in fact often too small to justify the costs of transition. The major reason is that many inevitable links between real-estate reality to its blockchain representation require human decisions to balance the diverging interests of affected parties.