Blockchain: from transactions to real estate registration

This article is co-authored by Cecilia Kahn and Maria Alejandra Ortiz.

Surely, many of us have heard about the blockchain and, mainly, because it is associated with transactions and investments with crypto assets such as bitcoin; however, this technology is also used for (a) the registration of real estate in the United States, Colombia and Brazil, (b) the registration of automobiles[1] and (c) even to carry out adequate control over the quality of food sold in centers such as Walmart. How was it created? What does it consist of? And what are its uses? These are some of the questions that we will answer in the following lines.

How did it come about?

El blockchain became known with the publication of the article by Satoshi Nakamoto[2], which explained a peer-to-peer electronic cash money system called bitcoin (Bitcoin: A Peer-to-Peer Electronic Cash System) and it was based on the use of a data structure blockchain for its funtionability. Thus, the blockchain, in its beginnings, it was used in operations with bitcoins.

What is it? How does it work?

El blockchain It is a data structure that works in an environment without an operator or central authority, and that can individually and identify data clusters in a secure way, based on the use of a unique identifier or unrepeatable hash, which allows registering any type of transactions, operations or businesses that are required to have documents, that is why, the simile of technology is usually made blockchain with a kind of "ledger", since this is nothing more than a shared and public database between the parties that records each and every transaction.

Thus, the existence of blockchain It is based on the following (i) the construction of a blockchain, in which each block is responsible for packaging each of the transactions made, (ii) a shared transaction log, (iii) the consensus of all users To verify the transactions, (iv) a contract that determines the operating rules of the transactions; and, (v) the use of cryptography.

These components allow the operation of the blockchain As follows:

  1. First, each transaction will be grouped into a block, which is a set of approved transactions and alphanumeric codes that allow each block to link to the previous and subsequent blocks and form a chain.
  2. Then, these blocks will be verified by computers, called "miners", whose purpose is to provide their computing power to verify transactions and authorize the addition of new blocks.
  3. Finally, once its validation is finished, the transactions contained in the blocks will be distributed to all the nodes that are part of that network, that is, to all the computers that use the network, who operate software that stores and distributes an updated copy. of said blockchain.

Therefore, blockchain It can be represented through infrastructure software, that is, a "computer program" or software designed to help business organizations perform basic tasks that support their internal processes and business transactions. This is shown by the diversity of software blockchain that exist in the market such as: Ethereum, Hyperledger, Kaleido Blockchain or Amazon Managed Blockchain.

How the technology is evident blockchain stands out against other types of electronic records for its characteristics of advertising, independence, autonomy, transparency and security in transactions. This is because the saved transaction logs are immutable, while any attempt to modify or violate implies a modification that must be registered on all connected computers, so the larger the chain, the more secure it will be. .

In which cases is the blockchain?

As previously discussed, the use of blockchain for bitcoins it has been the best known and studied; however, its use has been extended to various activities, such as:

Financial transactions

Common electronic financial operations necessarily require the presence of a reliable third party, such as a bank, Google Wallet or Paypal, who are responsible for reconciling operations and receiving a benefit in return; However the blockchain applied to financial operations, it allows to go from a centralized scheme to a distributed system that replaces slow and expensive transaction procedures with fast and secure payments. For example, the Polish-based “Billon” fintech provides solutions to e-commerce companies through the use of blockchain, allowing payments to be made with any financial institution at very low costs and in a simple way, since it provides a network of blockchain Private that does not require any central authority, financial intermediaries and is secure as it is an immutable, transparent and encrypted registry.

Property registration

The registration of real property, as many surely have experienced at some point, is a process that can take time, present errors and even occur cases of real estate registrations to names of people who are not the real owners, due to the number of people who They intervene to carry it out, and may be the parties that will carry out the transaction, real estate agents, notaries, banks, insurance companies, registrars and even judges. Currently, countries such as the United Kingdom, Japan, Colombia and the United States have opted to use the blockchain to create a real property registry to streamline procedures, reduce bureaucracy and maintain the traceability of each operation, which will allow to know the registry of documents with transparency and thus avoid counterfeiting. Likewise, Sweden, whose land ownership body is 100% digitized, in 2017, adopted the technology blockchain for land and property registration, reducing the registration process from months to just hours[3].

Also, according to the director of the Fintech Observatory of the Spanish company Everis[4]  el blockchain It would be useful not only for the registration of real estate, but also for the registration of proven successions, powers granted by natural persons and all acts related to legal persons, including for the registration of patents, distinctive signs and copyrights in which In case companies, artists or authors could register their invention or works, recording all the process they have carried out to carry out their creation[5], by registering all the documents that prove that they have been the creators and linking a hash (mathematical algorithm)[6] to your invention or work, if applicable.

Smart contracts

The use of blockchain to generate smart contracts (smart contracts) It consists of writing the terms of the transaction in a computer code that is cryptographically signed by the intervening parties and entered into the blockchain, so that they will be executed automatically when the foreseen conditions are fulfilled. An example proposed by Benjamín Yahari Navarro[7] "It would be the sale or rental of a car. It could be done through blockchain paying with digital currencies. The buyer obtains the receipt that is a smart contract, and the digital key that reaches it on the specified date. If the key does not arrive on time, your money is refunded. If it reaches both parties, they receive the agreed upon time. The system works on the Si-then premise and has a lot of people as its suppliers, so you can expect a smooth delivery. If I give you the key, I will surely get my payment, if you send a certain amount of bitcoin, for example, you will receive the car key. The document is automatically canceled after the date, and the code cannot be interfered with by anyone without the other knowing, since all participants are alerted simultaneously".

When carrying out transactions in this way, it is necessary to ask: will it be necessary to have notaries to certify these transactions? In some cases they may be dispensed with; however, said decision must be made according to the provisions of the legislation that is applicable in each country and provided that there is no formality that prevents the use of the smart contracts and the legal effects that it entails. In this regard, in 2017, the first purchase and sale of a property was carried out in Ukraine through smart contracts, whose previously agreed clauses were automatically executed, without the intervention of third parties and thanks to the use of ether cryptocurrencies and tokens[8] from Propy real estate[9]. In this way, the first case of real estate transactions was consolidated through blockchain.

Electronic vote

The use of technology blockchain to vote electronically could serve as a solution to cover the vulnerabilities and attacks of hackers that have arisen in some elections in which electronic voting was proposed, meanwhile, when each vote was registered in a transaction on the blockchain and encrypted, Voter identities may be protected, the vote count must be kept public and immutable and it can be seen if any vote has been changed or removed, thus guaranteeing a transparent electoral system.

Public administration

Governments can use the blockchain to create a history of the transactions carried out by public officials in the exercise of their functions, which would prevent the chain data from being changed once the transaction has been entered. This type of technology could be used by governments in bidding cases to guarantee that all those guidelines and conditions that are part of a public procurement process are complied with and, in this way, prevent the information from being modified or corrupting the process.

The aforementioned cases have been some examples in which technology has been used blockchain; however, surely, it can be used for other purposes, in which case, we consider that it will be necessary to first know what this technology implies, how it works, the advantages it offers and how to use it correctly in each particular case. Make use of blockchain It is a challenge that all of us must assume, which is why we believe it is convenient to promote projects that use blockchain and any other type of technology that allows transactions to be carried out safely and at lower costs.


[1] In May 2018, Ford, General Motors, BMW, and Renault formed the Mobility Open Blockchain Initiative (MOBI).

[2] Satoshi Nakamoto is the pseudonym that identifies the person or team that created the cryptoactive and who is currently the most famous. It is created, transferred and deposited electronically and is cryptographically protected.

[3] The Wall Street Journal, March 6, 2018 in ““ A Pioneer in Real Estate Blockchain Emerges in Europe ”available at https://www.wsj.com/articles/a-pioneer-in-real-estate-blockchain-emerges -in-europe-1520337601.

[4] Javier Ibáñez Jiménez. Director of the Fintech Observatory, Everis an NTT DATA Company, in “Blockchain, ¿el nuevo notario?”, Pages 6 and 11, available at https://repositorio.comillas.edu/xmlui/bitstream/handle/11531/14564/Blockchain_el_nuevo_notario .pdf? s

[5]  Benjamin Yahari Navarro "Blockchain and its applications", page 14, available at http://jeuazarru.com/wp-content/uploads/2017/11/Blockchain.pdf

[6] Cryptographic hash function is a mathematical algorithm that transforms any arbitrary block of data into a new character string with a fixed length, and regardless of the length of the input data, the output hash value will always be the same length. It is used, among other uses, to verify the immutability of the document or multimedia file to which a hash has been applied. Compiled from “What is a Hash and How Does it Work?”, April 10, 2014, available at  https://latam.kaspersky.com/blog/que-es-un-hash-y-como-funciona/2806/

[7] Benjamin Yahari Navarro OP CIT page 12.

[8] They are codes that protect sensitive data in a transaction.

[9] Banco BBVA, “Can blockchain change the way we buy houses?”, Available at https://www.bbva.com/es/puede-blockchain-cambiar-la-forma-en-que-compramos-casas/

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Cecilia kahn
Cecilia Kahn is a lawyer from the University of San Martín de Porres and has postgraduate studies in copyright at the Complutense University of Madrid and pursues a PEE at the Esan University. Cecilia has more than 7 years of experience in matters related to Personal Data Protection, Information Security and New Technologies, as well as legal advice for Startups, including Venture Capital. Currently, he works as an associate and leader in the area of ​​New Technologies and Protection of Personal Data of CMS Grau

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