Georgia: Authorities Use Blockchain Technology For Developing Land Registry

By Inge Snip*

In a bid to bolster property rights, Georgia is pioneering a new system for registering land titles and property transactions, using the same type of blockchain technology that underpins the virtual currency Bitcoin.

Georgian authorities created the system with the assistance of Bitfury, a firm specializing in developing blockchain-based software and hardware. It began a slow rollout in April 2016. So far, about 100,000 land titles have been registered under the program. In addition to registering land ownership, the program intends to handle property transactions, mortgages, demolitions and notary services.

Blockchain formation. The main chain (black) consists of the longest series of blocks from the genesis block (green) to the current block. Orphan blocks (purple) exist outside of the main chain. Source: Theymos from Bitcoin wiki, Wikipedia Commons
Blockchain formation. The main chain (black) consists of the longest series of blocks from the genesis block (green) to the current block. Orphan blocks (purple) exist outside of the main chain. Source: Theymos from Bitcoin wiki, Wikipedia Commons.

Property disputes have long been an issue in Georgia. Records in many cases are spotty, due in part to the chaos that accompanied the collapse of the Soviet Union in 1991, as well as the high level of corruption that plagued Georgia during the early years of independence. In some areas, especially in tourist destinations along the Black Sea coast, it is not unusual for land to be the subject of conflicting claims.

Georgia started addressing the issue in the mid-2000s, when the administration of Mikheil Saakashvili launched a reform to digitize records. The blockchain initiative is the next step in increasing public confidence in property-related record keeping.

“We wanted to increase the reliability, safety and transparency of services of the National Agency of the Public Registry,” Papuna Ugrekhelidze, NAPR’s chairman, told EurasiaNet.org. “And we thought blockchain technology would be a secure, transparent and accessible option.”

Blockchain technology relies on a distributed database in order to store information accurately and securely. Once entered into a block in the chain, data cannot be altered, thus the system provides a clear picture on the sequence of transactions.

Analysts are keeping an eye on the Georgian project, believing it has great potential to be an efficient solution to keeping track of lots of data. Exploring blockchain technology “is a healthy and forward-thinking approach to offering new and innovative services,” said Vijay Michalik, an expert on blockchain technology and a research analyst at Frost & Sullivan.

“The long-term vision of blockchain technology for trusted and auditable data trails and accountable governance is definitely worth investing in,” Michalik added.

BitFury custom-designed the system for NAPR. “It allows NAPR to verify and sign a document containing a citizen’s essential information and proof of ownership of property, and allows citizens to ensure their documents are legitimate without exposing confidential information,” BitFiry’s CEO Valery Vavilov told EurasiaNet.org in an email interview, adding that the system will soon include smart-contract capabilities to streamline business operations for NAPR.

Georgia is not the only country turning to blockchain technology for record keeping. The Chinese government is using it to fight fraud; Estonia has used a blockchain-based service that enables people to trade stocks; and Senegal is planning to use blockchain technology to introduce a national digital currency. Georgia, however, is believed to be the first state to implement a blockchain-based system for both land registration and transactions.

While blockchain technology has lots of appeal, there are potential risks, said Michalik, the sector analyst. “Future risks might include platforms which lose developer interest or support, flaws in the blockchain’s code or smart contracts, the cracking of the encryption algorithms by quantum computers, a fork in the developer ecosystem or state intervention,” he noted.

BitFury’s CEO Vavilov agreed that the risks are there, but told EurasiaNet.org that his company was “committed to designing secure and efficient blockchain systems.”

“Blockchain [technology] can secure billions of dollars in assets, and make a significant social and economic impact globally by addressing the rapidly growing demand for transparency and accountability,” Vavilov added.

Michalik, who acknowledged he had not fully studied NAPR’s blockchain system, expressed concern that some metadata could be insecure, including originating IP addresses, the values of transfers and other linked addresses. These possible vulnerabilities could pose a danger when services potentially expand into other areas.

“Much more caution must be taken when handling personal information, like criminal or medical records, and may need the technologies to mature further before attempting,” Michalik told EurasiaNet.org in an email interview.

Privacy concerns are prompting NAPR to proceed cautiously with the new system, Ugrekhelidze said. Even so, officials in Georgia are already pondering other potential uses for blockchain technology, including the creation of a National Repository of Governmental and Official Documents.

*Inge Snip writes about (social) innovation, startups, and grassroots movements. She hails from the Netherlands, but has lived in Tbilisi on and off since 2007.


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EurasiaNet

EurasiaNet

Originally published by EurasiaNet.org. EurasiaNet provides information and analysis about political, economic, environmental, and social developments in the countries of Central Asia and the Caucasus as well as in Russia, the Middle East and Southwest Asia. Copyright (c) 2003 Open Society Institute. Reprinted with the permission of the Open Society Institute, 400 West 59th Street, New York, NY 10019 USA, www.EurasiaNet.org or www.soros.org

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