Real Estate Investor Magazine South Africa Real Estate Investor Magazine - May 2017 | Page 30

Access to land titles and property rights
The disruptive potential here lies in the ability to
make land titles — and, in general, property rights
— available to billions of people who are currently
unable to legally register their property. Blockchain
technology also permits significant time and cost
savings in the registration process. A secure property
registry built on blockchain 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.
“If you take somewhere like
Egypt, 90 percent of people
have got houses, they’ve got
a garden, but they’ve got
no piece of paper to show
ownership of that ... And
without ownership of your
property, it’s almost impossible
to start a business or get a
bank loan or anything,”
Sir Richard Branson.
This must be a core component of any poverty
alleviation strategy in the third world. We need
to produce growth and economic participation by
removing expensive intermediaries, and reducing
barriers to entry. Importantly, in the third world
context, this technology is resilient to nepotism
and corruption ‒ you cannot bribe or control the
blockchain ‒ it just exists, and speaks the truth.
Everyone gets to play
We are just beginning to grasp the possibilities of
linking the remaining two billion unbanked people
into the global economy via technologies like bitcoin.
Anybody with a smartphone and a few cents to spare
gets to play. Being able to register property ownership
in a cheap, reliable way will feed billions in tradeable
assets into the system. These are people that even
today’s low-cost banks would see little business case
in pursuing due to the bank’s relatively high running
costs. To borrow a phrase from consulting, the long
tail is about to start wagging the hell out of the
traditional economy dog.
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MAY 2017 SA Real Estate Investor
A QUICK RECAP ON BLOCKCHAIN
T
he applications are vast: from finance and banking,
identity management, health records keeping and land
registries - everything can be done more cost effectively,
transparently and with a higher degree of fidelity. Blockchain
can keep an immutable record of anything (including ownership
of an asset). The powerful concept is that it does this in a global,
decentralized manner.
Anyone can store data in a database, but how do third parties
with competing interests (say, two banks) agree on a single
version of the truth? In practise, each bank keeps its own record
of transactions, and cross-checks this with the counterparty’s
version of events (with some level of automatic suspicion).
Disputes are resolved in complicated ways involving further
record-keepers in-between (i.e. clearing houses). All of this is
onerous, slow and expensive - and all these people need to be
paid, of course!
So, what if they all just shared one database? Well that’s
half the problem solved - but who gets to control this central
database? It would be far too much concentrated power for
a single entity or sovereign institution to have, and indeed a
single point of failure in a vastly important system.
This is where the genius breakthrough of a blockchain comes
into its own - it is an append-only, globally distributed, highly
resilient database. Developed to underpin Bitcoin in 2009, the
key innovation is a peer-to-peer network of nodes (computer
servers) around the world which store, validate and replicate a
single version of the true transaction records. These nodes are
a Financial Internet on top of the Internet, if you like. Anyone
can download the software and run a node on their internet-
connected PC or laptop. A cryptographic puzzle known as Merkle
Root hashing guarantees the validity of the work done by these
nodes. The nodes are rewarded with virtual currency tokens that
are found (or ‘mined’) in the process.
In the case of public blockchains like Bitcoin, there is no single
corporate entity, or sovereign government or institution that
controls the blockchain itself. It is like an ‘everywhere’ database
that can only record new events - i.e. it’s history is fixed in stone,
and indeed any change to its historical records would cause that
version of the database to become immediately invalid. The
Merkle Root hashes create thousands of digital fingerprints (and
fingerprints of fingerprints) - using all previous records. Change
one byte anywhere and your version of the blockchain will be
rejected by the global network of nodes validating the integrity
of the database.
RESOURCES
Investopedia, Reuters, CNBC,
Economist, World Bank, Nasdaq,
Bitcoin Magazine, Bitland, Brave New Coin
www.reimag.co.za