CASE STUDY: Blockchain Use in Land Registry in the Republic of Georgia

Summary

Georgia was the first country to introduce blockchain into its real estate registry, partnering with Bitfury in 2016. However, the project has been misrepresented as a success story. While the system uses blockchain to hash real estate transaction data and store it in a private ledger, it remains centralized, vulnerable to tampering, and lacks essential blockchain features like immutability and decentralization. The goal of protecting data from cyber threats through blockchain anchoring is misguided, as the technology only detects changes, not restores data. The registry remains largely unchanged and bureaucratic, without advancements like smart contracts or tokenization.

Takeaways

• 😀 Georgia is the first country to introduce blockchain technology into its real estate registry, but the implementation is not as revolutionary as often portrayed.
• 😀 The blockchain project in Georgia began in 2016 with Bitfury offering the government a pilot, providing resources to implement the system.
• 😀 The system in place does not fully integrate blockchain; it uses a private, permissioned ledger that stores cryptographic hashes of land registry entries.
• 😀 The blockchain project does not make the system public or fully distributed, and there is uncertainty about the number of nodes involved in the system.
• 😀 The hash anchoring process used in the project is often misunderstood—anchoring on the blockchain doesn’t protect or restore data, it only detects unauthorized changes.
• 😀 The idea behind anchoring is to protect the land registry from hacking threats, especially considering Georgia's security concerns due to past conflicts.
• 😀 The misconception about blockchain protection arises from the failure to understand that hashing is a one-way function, meaning it cannot retrieve or restore lost or corrupted data.
• 😀 The system still operates in a centralized way, with data stored in a closed storage environment, and is vulnerable to changes by those controlling the system.
• 😀 The Georgia project has not introduced advanced blockchain features like smart contracts, tokenization, or decentralized applications (dApps), which are present in other blockchain-based systems.
• 😀 Despite the blockchain's involvement, Georgia's land registry system remains largely bureaucratic, centralized, and traditional with no significant digitization or automation of land title processes.

Q & A

What is the main goal of Georgia's blockchain land registry project?

The main goal of Georgia's blockchain land registry project was to enhance the security of its real estate registry, primarily by using blockchain technology to store cryptographic hashes of real estate transactions, which were then anchored to the Bitcoin blockchain.

Why did the Georgian government turn to blockchain for their land registry?

The Georgian government sought to use blockchain to protect the land registry from potential cyber-attacks, especially in the context of heightened tensions with Russia and the need for additional security measures.

What is the role of Bitfury in this project?

Bitfury, a blockchain company, provided the necessary resources and technology to create a pilot system for the Georgian government's land registry. They helped develop a private permissioned ledger and the infrastructure to anchor cryptographic hashes to the Bitcoin blockchain.

What is meant by 'anchoring' in the context of this project?

Anchoring refers to the process of periodically publishing hashes of the private ledger onto the Bitcoin blockchain. This is done to ensure the immutability of the hashes, making it harder for hackers to alter the land registry data without detection.

Does the blockchain technology used in Georgia's land registry protect the actual data?

No, the blockchain technology used in Georgia's land registry does not protect the actual data. It only protects the cryptographic hash of the data, which serves as a fingerprint, allowing for the detection of unauthorized changes, but it does not restore lost or altered data.

What misconception does the Georgian blockchain land registry project address?

The misconception is that the project was the first fully decentralized blockchain-based land registry. In reality, the system is centralized, with only cryptographic hashes stored on a private ledger and anchored to Bitcoin, rather than a fully decentralized system.

How does hashing work in the context of this project?

Hashing is a one-way cryptographic function that creates a unique digital fingerprint of data. In this project, each real estate transaction is hashed and the hash is stored in the private ledger. These hashes are then periodically anchored to the Bitcoin blockchain, providing a way to detect changes but not to restore the data if it is lost or corrupted.

What is the main limitation of using hashing for data security in this project?

The main limitation is that hashing cannot protect the actual data or restore lost data. While it can verify that the data hasn't been tampered with, it cannot help recover or repair corrupted or lost data.

How is the system used in Georgia's land registry different from a fully decentralized blockchain system?

The system in Georgia's land registry is centralized, using a private permissioned ledger based on the Exon DLT framework, not a fully decentralized blockchain. It lacks features like smart contracts, tokenization, and true decentralization that would typically be found in blockchain-based systems.

What does the term 'Merkle tree' refer to in this project?

A Merkle tree is a structure used to organize and hash multiple pieces of data into a tree-like structure. In this project, Merkle trees were used to hash multiple entries of the land registry and publish the root hashes onto the Bitcoin blockchain.