The Republic of Georgia has formally teamed with Bitfury Group, a provider of blockchain infrastructure, to use the bitcoin blockchain to validate property-related transfers, according to Forbes.
Bitfury Group first partnered with the Georgia government last April to register land titles using a private blockchain and to verify them using the public bitcoin blockchain. This marked the first time a national government used the bitcoin blockchain to validate and secure government actions.
Parties Expand Agreement
The Georgian National Agency of Public Registry (NAPR) and Bitfury have agreed to expand the service to sales and purchases of land titles, mortgages, rentals, new land title registration, property demolition and notary services.
Similar software has been developed in Honduras, Sweden and Cook County, Illinois in partnerships with Factom, ChromaWay and Velox, respectively.
Economist Hernando DeSoto has estimated that the value of “dead capital” from not having legal title to assets at $20 trillion worldwide,
Georgia will use blockchain technology to place real estate extracts in a safe and innovative system, Georgia’s minister of justice, Tea Tsulukiani, said in a prepared statement.
Papuna Ugrekhelidze, NAPR chairman, said the department is pleased with the technical progress.
Citizens Can Check Land Titles
Valery Vavilov, Bitfury CEO, said Georgia’s government likes how easy blockchain can be deployed with the existing system. The only difference for Georgia citizens is being able to check to see if a land title is legitimate.
Vavilov said the software will be fully operational this year. He said the major goal is to move the process to smartphones so it can be used 24/7 with secure, transferrable, and accountable transactions.
Records in a blockchain based ledger are time stamped. People interested in specific property can verify the dates of transactions.
Data can be public or private. In Georgia, real estate transactions are placed on a private blockchain and turned into a cryptographic hash that is made public on the bitcoin blockchain to verify the authenticity of certificates.
The hash serves as a digital fingerprint allowing anyone to verify that the data matches what is on the blockchain without actually seeing the data itself.
There is no central point of failure with blockchain technology, bringing security to real estate transactions.
Also read: Republic of Georgia to introduce blockchain platform for real estate documents
Private Versus Public Blockchains
Most governments and institutions that have shown interest in blockchain technology have pursued private blockchains due to reasons of privacy.
Bitfury is exploring the bitcoin blockchain because it is public, bringing transparency, and because it would be the most difficult to alter.
Bitfury teamed with the National Democratic Institute last summer to create the Blockchain Trust Accelerator to develop blockchain projects having a positive social impact. The Georgia pilot is the first such project.
Tomicah Tillemann, co-founder of Trust Accelerator and New America director of the Bretton Woods II program, said the decision to use the bitcoin blockchain at a time of a global crisis of confidence in institutions points to a strong indication of Georgia’s commitment to accountability and transparency.
Blockchain Faces Challenges
There is currently a rift in the blockchain community over how to expand the network to accommodate more transactions.
Bitfury eventually plans to put notary services and smart contracts like escrow onto blockchains in Georgia. Processes for verifying information accuracy on the ledger has yet to be established. But Tillemann said Georgia’s property registration systems have been ranked the world’s third best by the World Bank.
Jamie Smith, Bitfury chief communications officer and accelerator co-founder, said an advantage of the pilot is Georgia’s existing software strength.
Bitfury recently received a $30 million investment from Credit China Fintech Holdings, making for a total $90 million in company funding.
Image from Shutterstock.
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