Washington, March 22, 2017 Blockchain – Can this new technology really revolutionize the land registry system ? Maurice Barbieri, President of the CLGE Dr. Dominik Gassen, Chairman, New Technologies WG, CNUE

Blockchain and Land Registers: Two examples for major unsolved issues Washington, March 22, 2017 Blockchain and Land Registers: Two examples for major unsolved issues Maurice Barbieri, President of the CLGE Dr. Dominik Gassen, Chairman, New Technologies WG, CNUE

01 Distributed Trust – Does it work for Land Registers?

All Blockchain transactions are recorded in a virtual ledger.

The ledger is not kept by a single entity – but as identical copies by a multitude of people. That makes it hard to make fraudulent entries, because you have to convince a majority of participants of your problematic transaction.

This works fine for bitcoin, because participants can be rewarded for their efforts in bitcoins.

But there are problems. The blockchain is getting bigger and bigger – and more unwieldy. It takes a lot of computing power to keep it. So people join together to share the burden („distributed ledgers“). In the end there are not that many ledgers around. p.1-50 p.51-160 p.161-200

The size of the blockchain makes it more feasible to keep it with professional providers – like ISPs, state institutions and large computing service providers – not „Joe Public“.

If blockchain technology becomes more widespread, who will keep all these ledgers? Bitcoin Land Register A Private App Land Register B Another virtual currency Banking App

And why would people be interested if you cannot offer them system-based rewards – you can hardly give parcels of land to virtual participants …

You might end up with a blockchain that has very few separate instances of the ledger – mostly kept by professional players that might have their own agenda. What if the majority were kept in a neighboring country that you are not on the best terms with? Major IT Business State IP State IP State IP Cloud Service B State IP ISP A

What started out as a system of democratized trust ends up depending on very few players – that you might not even trust very much. From this point of view „distributed trust“ is not a great argument to distinguish blockchain-based land registers from those kept in traditional database systems.

02 Is a blockchain-based land register a deed system in disguise? Or: Who actually owns your house?

When you buy your house or parcel the transaction is registered in the blockchain.

Technically, it‘s not that simple. What happens is that this transaction is signed with a cryptographic key. That key is unique. Only the owner has access to it.

It is digital data It can be stored… If you want to prove ownership you have to produce the key – otherwise the transaction cannot be verified. But what do you do with the key and what does it look like? on your computer on your mobile on a usb drive It is digital data or a chipcard It can be stored…

But all these things can break or crash (easily), get stolen, thrown away or forgotten. It is easy to forget the importance of this sort of data, if you are not an IT expert and don‘t have to work with it frequently.

So you give it to someone for safe- keeping … in Bitcoin those are called „wallet providers“ (which is a strange idea for a system that wants to get rid of third party trust providers …). The problem is: They get hacked (and are actually a very attractive target for hackers). It happened famously in bitcoin and some of the problems have yet to be resolved.

Now, for whatever reason, your key is lost. What happens now? Actually, there is not a lot you can do. You have no other way to prove your ownership against the blockchain. If you succeed in convincing a court that you actually own your house, the blockchain cannot be changed regarding your entry, because it is connected to all later entries (hence the „chain“).

Blockchain proponents have yet to suggest a solution to these problems Blockchain proponents have yet to suggest a solution to these problems. You might be willing to take a risk if this were only a question of a few exper- imental bitcoin fractions. But would you be comfortable to stake your house on it? There is good reason that traditional registers always connect ownership to identity – witch can be established and proven in different ways and registers are more amenable to necessary interventions by the judiciary and other competent authorities.

Thank you for your attention Washington, March 23, 2017 Thank you for your attention Maurice Barbieri, President of the CLGE Dr. Dominik Gassen, Chairman, New Technologies WG, CNUE