Real Estate Investor Magazine South Africa Real Estate Investor Magazine - May 2017 | Page 29

T
here is a clear link between private property ownership and the
ability for individual citizens to participate in the economy as
a whole. The ability to securely and legally lay claim to land
promotes economic efficiency. The owner is incentivised to do work to
increase its value because the more valuable it is, the more it can be traded
for. This is not the case, for instance, with public land or land that is at
risk of expropriation without compensation.
According to Investopedia, “Private property rights are central to a
capitalist economy, its execution and its legal defences. Capitalism is built
on the free exchange of goods and services between different parties, and
nobody can rightfully trade property they do not own”.
Sir Richard Branson was quick to recognize the potential for Bitcoin
and its underlying blockchain technology to completely revolutionize
the world economy, especially developing economies, where proving
ownership of assets or getting access to capital is difficult.
In 2016, the Economist ran a frontpage story on blockchain, dubbing
it “The Trust Machine” because it doesn’t require two parties in a
transaction to necessarily trust one another, nor require the services of
a clearing agent or intermediary. The economic effects are nothing short
of profound, and a sea change is beginning to be felt around the world.
Blockchain to the rescue
Peruvian economist Hernando de Soto recently won the 2017 Global
Award for Entrepreneurial Research. de Soto’s work has had a major
impact on land and other asset rights worldwide. Nearly two decades
ago, de Soto penned a seminal work ‘The Mystery of Capital: Why
Capitalism Triumphs in the West and Fails Everywhere Else’. The
central argument of the book is that the problem in developing nations is
not that capitalism is a bad inherent fit, but rather that there is a lack of
effective implementation of property rights.
Today he continues to assert that citizens of poorer countries are
unable to develop plots of land or utilize them as collateral because they
lack clear legal titles. When ownership of assets is dif ficult to trace and
validate, amid no legally recognizable set of rules governing them, they
become what he calls “dead capital,” with no real inherent value.
Current blockchain projects
There are several notable blockchain projects underway to address these
issues. de Soto is himself involved in a project with the National Agency
of Public Registry in the Republic of Georgia to convert the national land
registry to blockchain. There is an initiative underway to blockchain-title
half of all urban dwellings in Peru with plans to expand into rural areas.
Ubiquity LLC is piloting a project in Brazil to move paper-based
records to blockchain for the government registry office, Cartório de
Registro de Imóveis. Estonian blockchain startup, Chromaway, will
begin a similar project in Sweden - including the use of so-called on-
chain ‘smart contracts’ for transfers and sales.
Closer to home, the Bitland project, under the leadership of Narigamba
Mwinsuubo, has started in Ghana with ambitions to spread through the
African continent. They are initially looking to assist governments in
resolving land disputes in hard to reach areas. Bitland offers a turnkey
solution, ready with land and agricultural survey drones, relevant
hardware and infrastructure to record and maintain the data.
www.reimag.co.za
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