Blockchain and Property Transactions: A Comparative Analysis

Abstract

This paper explores two alternative modes of organizing property transactions in the blockchain. When rightholders transact directly on the blockchain, a reduced numerus clausus of property rights is needed. Moreover, owners would be making final decisions about their property and bear full responsibility for them, what would undermine the universal character of the system. An alternative design would rely on private or public intermediaries to operate the blockchain on behalf of owners. With private intermediaries (notaries or licensed conveyancers) chosen by transactors and writing directly on the blockchain, competition among intermediaries would encourage expediency but endanger the interests of strangers to the intended transactions, with a risk of fraud and remedial judicial rulings downgrading the indefeasibility of the registry entries. With public intermediaries such as registrars vetting intended transactions, blockchain does not replace the register but merely takes care of the private conveyancing part of transactions, with less innovation and more bureaucracy. The paper applies the model of Arruñada, Zanarone, and Garoupa (JLE, 2019) and illustrates the theory with empirical evidence from existing systems and pilot projects applying blockchain solutions.