Vizag runs a pilot to show the world how to put land records on blockchain

Photo credit: Rajarshi Mitra.

Property fraud is rampant in India and takes many forms. It’s one of the biggest avenues for investing black money. One way is to hold property in other people’s names, and this practice is called benami, which means ‘false name.’

In this murky scene, the government does not only lose revenue, but buyers can also be duped when the same property is sold to multiple entities. What exacerbates it is rampant corruption. The Indian government introduced a new law and have seized benami properties worth US$282 million since November last year.

We have already given up a lot of our black boxes. We will lead this transformation.

Sprawled across 160,000 sq km on the east coast with a population of over 50 million, the state of Andhra Pradesh wants to use blockchain technology to tackle the problem. Blockchain’s immutability can make land records tamper-proof. Its visibility to multiple entities also makes the system transparent.

The state is running a pilot by Swedish startup ChromaWay to put land records on a blockchain. Doing a pilot is one thing, but executing it on the ground can upset the apple cart even within government. So does Nara Lokesh, the state’s IT minister, expect resistance from vested interests who have gotten used to exploiting the current system?

“We have already given up a lot of our black boxes. Land records have been made online,” Lokesh tells Tech in Asia, referring to the ePragati program launched recently in the state to digitize government services.

The next move for e-governance is blockchain, starting with land records but with potential applications in several other areas like health services, food supplies, and finance. “We will lead this transformation. That’s the only way we can get rid of corruption also,” adds Lokesh.

ChromaWay CEO and co-founder Henrik Hjelte (right) makes a presentation to Andhra Pradesh IT minister Nara Lokesh (wearing white shirt). Photo credit: Nara Lokesh.

Last month, ChromaWay made a pitch for the government project and got the nod to run a pilot. A similar project in its home country Sweden has progressed beyond the trial stage and has a wider ambit of buying and selling property. Apart from involving the land registry, banks, buyers, sellers, and agents, it deals with titles and other documents like mortgages as well as payments.

“In Sweden, we focus on the whole process of real estate transactions. Here in Andhra Pradesh, it’s more about storage of titles, security aspects, and transparency,” says ChromaWay co-founder and CEO Henrik Hjelte, who has been a developer for over 25 years. He was a finance and IT consultant before becoming an early blockchain entrepreneur.

See: Crypto boom spawns blockchain accelerators

In Sweden, banks phone each other on the last day to confirm if the payment for a property deal has arrived, Hjelte explains. Inefficiencies such as this can be reduced by using blockchain.

“Digital signatures and a transparent blockchain lets everyone see where they are in the process, whether everything is signed in the right order. It’s like a workflow solution,” says Hjelte.

Colored coins

Photo credit: Coloredcoins.org

ChromaWay was one of the earliest developers of blockchain technology. In 2012, co-founder and CTO Alex Mizrahi came up with one of the first ways to associate real-world assets like land deeds with addresses on the bitcoin network – in other words, a bitcoin-based blockchain. Most blockchain tokens today are based on contracts using the ERC20 standard of Ethereum. But Chromaway’s Colored Coins project preceded Ethereum.

“Vitalik Buterin was in the open-source product we had for a while before he built Ethereum,” recounts Hjelte. “It was the first project to use protocol-issued tokens on bitcoin.”

Vitalik Buterin was in the open-source product we had for a while before he built Ethereum.

The so-called Bitcoin 2.0 expanded the use of the bitcoin blockchain from representing cryptocurrency to other assets as defined in various tokens. Each color in the so-called colored coins represented a different asset, like land, gold, or currency.

Hjelte, Mizrahi, and a third co-founder, Or Perelman – who were based in Sweden, Ukraine, and Israel, respectively – had only met online when they started ChromaWay. The company initially worked with a bank in Estonia on a mobile-based payment system using colored coins.

“It was an eye-opener for banks. But we were very early,” says Hjelte. “No one was doing anything like this until 2014.”

The scene is very different now, with ICOs (initial coin offerings) taking off in the last two quarters of 2017. Governments, banks, and large corporations are actively seeking blockchain-based projects. Andhra Pradesh, for example, is motivated not only by the potential to reduce corruption in land registration, but also by a desire to be an early adopter of groundbreaking tech.

This state is only three years old. Andhra Pradesh was split into two in 2014, with the new state Telangana being carved out of it after a decades-long agitation. Hyderabad will remain the capital of both states for a maximum of 10 years, after which it goes to Telangana.

Andhra Pradesh chief minister Chandrababu Naidu, who had built Hyderabad into a tech hub by famously persuading Bill Gates to base Microsoft India’s headquarters there, now wants to turn Vizag into a fintech hub. Naidu, who is also the father of Lokesh, promised delegates at a blockchain conference in Vizag last month that the state would open up government projects to them.

“Politicians can drive this (adoption of blockchain),” says Hjelte. “I found some guys from my country looking to set up a base here… The chief minister and IT minister turning up for a blockchain event is something that won’t happen in my country,” he adds with a laugh.

See: ‘World’s largest fintech hub’ expands from Singapore to Vizag

But core challenges remain in both Andhra Pradesh and his home country of Sweden, where the real estate blockchain is in its third phase. In Sweden, ChromaWay has run into legal issues, such as a law that requires physical signatures on land documents. “Different jurisdictions can have different rules,” says Hjelte. “Everything takes time in enterprises, banks, and the public sector.”

In India, the challenges can be even more basic – tattered maps, records not updated for decades, longstanding disputes over boundaries and land usage, multiple owners, and so on. It’s an arduous task to get a fix on the land assets before converting them into digital records, which is the first step in building a real estate blockchain.

J A Chowdary, special chief secretary and IT advisor to the Andhra Pradesh chief minister, hopes that tech will resolve these issues. An IIT Madras post-graduate in solid state technologies, Chowdary was the managing director of Nvidia in Hyderabad and a tech entrepreneur before joining his current position with the AP government.

We have to look beyond naive thinking about the technology. We need real solutions that actually work with the inclusion of everyone.

Andhra Pradesh has come up with an 11-digit unique ID called Bhudhar that combines India’s biometric citizen ID Aadhaar with land titles – bhumi means land in most Indian languages. The Bhudhar project matches surveys on the ground with satellite imagery for verification. Eventually, once a Bhudhar number is assigned to a piece of land and its owner, it can be used for updating records and all other transactions.

Naidu, Lokesh, and Chowdary form a trio with the drive and resources to make Vizag one of the first places to put land records on a blockchain. The Indian government is also exploring ways to use blockchain for land records, distribution of subsidies, and other purposes where its transparency and immutability solve problems. Dubai, Brazil, and Georgia are among other early adopters of blockchains for land titles.

But Hjelte cautions against getting carried away with the idea of tokens for everything. They need to have a utility in the system instead of just being bolted on to a product. And they should be usable by all.

“Can we assume every inhabitant of Vizag would have a private key and would know how to use it?” asks Hjelte. “We have to look beyond naive thinking about the technology. We need real solutions that actually work with the inclusion of everyone.”

This post Vizag runs a pilot to show the world how to put land records on blockchain appeared first on Tech in Asia.

from Tech in Asia https://www.techinasia.com/indian-state-running-pilot-put-land-records-blockchain
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