If we talk about land verification system using blockchain technology, it indirectly means the land registration system with blockchain technology. Unless we store land registration information in the blockchain system, we cannot take the benefits of blockchain technology to verify it. So, in our proposal we will briefly discuss about current land registration system, challenges faced in our traditional system, finally how we can solve those challenges through the use of blockchain technology.
Land registration generally describes systems by which matters concerning ownership, possession or other rights in land can be recorded (usually with a government agency or department) to provide evidence of title, facilitate transactions and to prevent unlawful disposal. The information recorded and the protection provided will vary by jurisdiction.
It is a process of officially and legally recording land or built property rights through deeds or title certification. It publicly shows that there is an official record of ownership with inherent rights through that ownership.
The land registry office in our country is typically responsible for various matter e.g.:
- Matters concerning ownership, possession or other rights of real land/property are recorded and preserved;
- Records are maintained regarding land and other real estate to properly assess its value and to collect property taxes;
- Internal confidence between its people, commercial enterprises and its government are manifested and promoted (However, this is not always the case. It’s too easy to pick a country which does not have the trust of its people);
- The documents and data that are recorded is usually the information that shows legal ownership and provides individual and enterprise protection.
How to check the ownership of a property in Bangladesh currently?
In Bangladesh, dispute with property ownership is very common. Documents related to property are easily forged and unreliable. If any person, while buying a property, is not cautious, might face problems, possibly litigation with the ownership of the property at a later stage. However, checking ownership of property in Bangladesh is a laborious job.
To check the ownership of a property, a buyer should do the following:
Collecting information about the property:
- Establishing chain of history of the property
- Authenticity of the title deed(s):
- Check the khatian/porcha:
- Check the mutation khatian:
- If the property is leased from government
- Tax record
- Physical verification of the property:
Land registration procedures in Bangladesh
The following steps are required to complete if anyone likes to buy an apartment or a piece of land for either residential or business purposes:
- Confirm the record of rights from the Land Office
- Conduct mutation on property
- Obtain inspection for RS mutation
- Obtain the non-encumbrance certificate from the relevant sub-registry office
- Prepare deed of transfer and pay stamp duty
- Pay capital gains tax, registration fee, VAT and other taxes at a designated bank
- Apply for registration at the relevant Sub-registry
- Register the change in ownership at the Land Revenue Office
Challenges in the current Land Registry System
In our existing system there are a lot of challenges.
- Ownership Verification – One of the challenges faced by land registration authorities worldwide is to ensure ownership verification.
- Ownership History – On many occasions, many properties do not have a recorded ownership history. Having access to the complete ownership history for an asset (e.g. block of land) increases trust when transacting with unknown parties.
- Unauthorized sale of lands – Properties may get sold without authorization causing financial damage to the owners or insurance companies.
- Delays in Ownership Transfer – Paper-based land registration and ownership transfer are prolonged taking more than a month. Inaccurate valuation of the properties can lead to incorrect tax or insurance premiums.
- Failure to detect scams – Current paper-based or digital records fail to prevent frauds and identity theft that can lead to illegal sales.
Use of blockchain in land registry system
A blockchain, originally block chain, is a growing list of records, called blocks that are linked using cryptography. Each block contains a cryptographic hash of the previous block, a timestamp, and transaction data. Only blockchain can solve the challenges because of the characteristics of blockchain. The major characterizes of blockchain are:-
- Immutability: the creation of data records that are permanent (cannot be changed or deleted);
- Traceability: Using blockchain an item can be easily tracked to find the provenance in the transaction history.
- Security: Blockchain is considered to be a highly secure system due to its digital signature and encryption. The system is specially designed to be secure, convenient, and tamper-proof.
- Time-stamping: every entry created in the blockchain is securely tracked with a time-stamp (permanency makes backlogging impossible);
- No Single point of failure: The ledger is distributed across every single node in the blockchain who are the participants. So, it is distributed.
- Fraud prevention: Since various consensus protocols are needed to validate the entry, it removes the risk of duplicate entry or fraud
- Transparency: The transactions that take place are transparent. The individuals who are provided authority can view the transaction.
- Smart Contracts: With the smart contracts, the businesses can pre-set conditions on the blockchain. The automatic transactions are triggered only when the conditions are met.
Types of blockchain
There are at least four types of blockchain networks
1) Public Blockchain: – Anyone can participate in a public blockchain because it is open-source and public to all where no one is in charge. There is no access or rights management done for a public blockchain and anyone can be the part of the consensus. All transactions are public, and all nodes are equal. The best-known public blockchains used for cryptocurrency are Bitcoin and Ethereum
2) Private Blockchain: – A private blockchain is an invitation-only network governed by a single entity. Entrants to the network require permission to read, write or audit the blockchain. Private Blockchain allows organizations to employ distributed ledger technology without making data public. Hyperledger fabric is an example of private blockchain.
3) Consortium Blockchain: – a hybrid type that operates under the leadership of a group of member companies instead of a single entity. Examples of consortium blockchains would be: Quorum and Corda.
4) Hybrid Blockchain: – A hybrid blockchain has a combination of centralized and decentralized features. The exact workings of the chain can vary based on which portions of centralization decentralization are used. Example: DragonChain
Again based on permission before joining the network blockchain can two types:-
- Permissioned blockchain – which allows only known nodes to participate in the network. Example :- Hyperledger fabric
- Permissionless blockchain – anyone and anything can become part of a permissionless blockchain. Example :- Bitcoin, Ethereum
Private and Permissioned blockchains are faster, more efficient and more cost-effective than public and permissionless blockchains.
Based on characteristics of our land registry and verification system, we highly propose that Hyperledger fabric platform is most suitable platform to solve our problem. Because our land information should not be public blockchain as well as anyone should not connect to land registry blockchain platform without proper authorization.
Why Hyperledger fabric is chosen?
There are some others reason too for choosing hyperledger fabric as blockchain platform. They are:-
- Build in permissions: – Hyperledger Fabric comes with a full permission system. You can choose who will be able to access your blockchain and at what level they get access
- Transaction Consensus: – Hyperledger will come to a consensus on transactional level. This means for a transaction to be considered valid, the whole block doesn’t need to be validated, but only the transaction.
- Chaincode support: – As for now Hyperledger fabric supports NodeJs, Java or Go code.
- No cryptocurrency needed: – Hyperledger can run without implementing a cryptocurrency unlike etheruem.
- No Proof of work/proof of stake: – Hyperledger doesn’t need computers solving problems day and night, Hyperledger doesn’t need people to have cryptocurrency to reach consensus.
- Open source supported by IBM: – Hyperledger fabric is maintained by IBM and it has been open source too.
We have identified three stakeholders so far (not limited to).
- Ministry of Land(WRITE and READ permission)
- Ministry of Public administration (only READ permission)
- Ministry of Home Affairs(only READ permission)
Proposed components of our Hyperledger Fabric based System
For our practical experiment we need the following components of Fabric:
- Membership Service Provider (or Certificate Authority) -Membership Service Provider (MSP) is a component that aims to offer an abstraction of a membership operation architecture. In particular, MSP abstracts away all cryptographic mechanisms and protocols behind issuing and validating certificates, and user authentication. Each organization will maintain their own MSP.
- Orderer – Orderer peer is considered as the central communication channel for the Hyperledger Fabric network. Orderer peer/node is responsible for consistent Ledger state across the network. Orderer peer creates the block and delivers that to all the peers. There will be multiple number of orderer.
- Peer – Peer receives ordered ledger state updates in the form of blocksfrom the orderer and maintains the state of the ledger. Peers can additionally take up a role of an endorsing peer. Chaincode (similar to Ethereum Smart Contract) installed in peers. There will multiple number of peer for each organization. There are different types of peer nodes with different roles in the network:
- Endorser peer
- Anchor peer
- Orderer peer
- Organization – Organizations logically separates members (peers) and the may or may not share the MSPs.It is recommended to have one MSP per organization and we follow that recommendation. In our case, our stakeholders are the organization
- Channel -A Hyperledger Fabric channel is a private “subnet” of communication between two or more specific network members, for the purpose of conducting private and confidential transactions. Each peer of every organization that joins a channel, has its own identity given by a membership services provider (MSP), which authenticates each peer to its channel peers and services.
- Smart contracts (chaincode) – A smart contract is an agreement between two people in the form of computer code. They run on the blockchain, so they are stored on a decentralized database and cannot be changed. The transactions that happen in a smart contract processed by the blockchain, which means they can be sent automatically without a third party. So far we have identified three smart contracts (not limited) in our blockchain system. They are for :-
- Khatiyan Record
- Land Tax Record
- REST API server – This server provides a convenient REST interface for web applications to transact on Hyperledger network. It uses Node.js SDK API to call peers, orderer and CA servers of network’s members. The API server is meant to be run by each member organization. It manages user authentication, interacts with peers and passes events to the client.
- Traditional Land Management System – Land Management system e.g. https://land.gov.bd/ or online system of Ministry of Land will communicate with Hyperledger network through the REST API.
- Mobile Verification Application – A QR code will be embedded on the document for the transaction of the land information and printed on the document when downloaded from Land Management system. Our mobile application will verify the authenticity of documents by scanning the QR code with our specialized mobile application. This mobile application will communicate with the REST API server too
- Web Verification Portal
There will be an online portal where any land information can be checked to verify the genuineness of the documents by filtering different fields. This portal will communicate with Hyperledger fabric network via REST API server. This filtering feature may also be added in any authorized site which people will believe e.g. Ministry of Land’s website, http://land.gov.bd website.
How does Hyperledger Fabric Work ?
Figure: Hyperledger Fabric work flow
- A participant of Ministry of land invokes a transaction request through the client application.
- Client application broadcasts the transaction invocation request to the Endorser peer.
- Endorser peer checks the Certificate details and others to validate the transaction. Then it executes the Chaincode (ie. Smart Contract) and returns the Endorsement responses to the Client. Endorser peer sends transaction approval or rejection as part of the endorsement response.
- The client now sends the approved transaction to the Orderer peer for this to be properly ordered and be included in a block.
- Orderer node includes the transaction into a block and forwards the block to the Anchor nodes of different member Organizations of the Hyperledger Fabric network.
- Anchor nodes then broadcast the block to the other peers inside their own organization. These individual peers then update their local ledger with the latest block. Thus all the network gets the ledger synced.
System Architecture of Blockchain Enabled Land Verification System
Figure: System Architecture of Blockchain Enabled Land Verification System
Benefits of land registration/veriffication using Blockchain
- Land selling/buying processing time can be reduced from months to few days.
- Verification of ownership of land reduces to one/two steps as the information in blockchain is immutable and trustworthy.
- Paperwork and postage cane be eliminated from the purchase process.
- Fraud prevented because the buyer receives a pending property title, hence the property cannot be resold.
- Chance of property title not being issued reduces significantly because all documents required by law are added to the blockchain.
- Reduces manual intervention and realizing real-time property title assignment.
- Digital signatures ensure high levels of security in the property transaction process.
We have real working experience of blockchain technology in both private and public blockchain platform. We believe that we that easily implement a prototype/minimum viable product (MVP) of Land Verification System using blockchain technology within short period of time.