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Land Records on a
Blockchain
A Proposal by Elemential Labs

13th May, 2017

A-17 Dattani Plaza, Saki Naka
Andheri East, Mumbai, 400017
+91 98201 07378
aaryaman@elemential.com


1

An Introduction to Real Estate on a
Blockchain
“Any asset whose economic and social aspects are not fixed in a formal
property system is extremely hard to move in the market. How can the huge
amounts of assets changing hands in a modern market economy be
controlled if not through a formal property process?”
- Hernando de Soto, decorated Peruvian economist
Hernando de Soto’s defining work is based upon the notion of ‘dead capital’; in the
context of real estate, dead capital refers to the opportunity cost of untapped funds
that could have been raised using well documented land deeds as collateral. In de
Soto’s estimation, there is $10trn locked up globally in dead capital in the form of
poorly documented land. According to Lalitesh Katragadda, the founder of Google
MapMaker and the man most responsible for digitally mapping India, there is $4trn
worth of land in India which is lying idle.

The key to unlocking the value in these dead assets is the creation of a robust,
dematerialized registry of property holdings. For land to realize its full potential as
an asset class, it should have clear provenance, unambiguous legal standing, and a
simple interface for its leasing, sale, and conversion. Building such a database and
interface for land records has been a taxing challenge for many nations, especially
given the amount of different regulatory bodies and intermediaries required to
govern a land deal. One of the primary hurdles impeding the development of such
databases was a technological one. Using traditional database technology, it was
difficult to maintain a unified and consistent picture of a national or regional land
registry. With the development of blockchain technology - a technology which at its
core is designed to be a consistent, ordered, series of records, some of these
technological hurdles are melting away. It is for this reason that Mr. de Soto joined
forces with BitFury group to help streamline and document the land deeds of
Georgia on a blockchain. Similarly, the governments of Estonia, Honduras, and
Sweden have begun testing blockchain-based technologies that will allow them to
create robust land registries intended to save costs, reduce systemic friction, and
unlock value in their real estate industries.

In this document, Elemential Labs proposes a system to digitize, simplify, and
enhance land records in India using blockchain technology.

2

The Problems with Land Records
In order to design and evaluate a system intended to revamp the real estate sector of a
country or state, it is vitally important to have clarity on the current issues bogging down
the system. Some of the main problems with today’s land registries in India are as follows:

1. Benami land deals:

A benami land deal is a deal in which one person purchases and owns the land using funds
provided by a clandestine beneficiary. Essentially, the benamdar acts as a front for the
property while the real owner (who likely uses unknown or undeclared sources of income to
finance the deal) is the one who actually enjoys the benefits of the property. Benami land
deals are one of the problems faced by land regulators in India.

2. Tampering, forgery, and destruction of land records:

Many of the land registries in the world today place lots of power in the hands of
functionaries who can alter or destroy these records for personal gain or through mishap. In
Honduras, for example, it was commonplace for high ranking government officials to
rewrite the national land registry to give themselves the deeds to prime beachfront
properties. The destruction of physical land records can also be catastrophic to countries
that maintain paper records; fires, floods, and other disasters have caused problems in
India before. Digital land records can also be compromised or lost.

3. Proliferation of dead capital:

The economist Akhilesh Tilotia estimates that in India there are around 120m small and
marginal cultivators and about 8.5m retail outlets (‘mom and pop’ shops) that are still in
need of strong land titles. The absence of such records makes it difficult for these small
landowners to obtain credit or expand or sell their businesses easily. This problem is
exacerbated as small landowners divide up their properties haphazardly amongst their
children. This in turn leads to the development of extra-legal economies which cause losses
both to the individuals and to government coffers. This problem can be seen clearly in the
huge number of chawls, huts, and slum dwellings which lie outside the formal economy and
create a fraction of their true economic value.

4. Slow and complex transactions:

There are a slew of different categories of land and property in India; the processes to
lease, convert, buy, sell, or otherwise effect a change upon any of these types of real estate
are time consuming and complex. One of the main reasons for this is that each time a land
deal has to take place, title searches have to be conducted. These searches take a long
time to properly establish provenance and ownership. Another problem is that there is little
transparency into the processes involved in land deals; the workings behind the scene are
completely opaque to many citizens and companies.

Any system intending to improve the state of land records in India should begin by tackling
these issues.


3

An Alternative System
In order to create a system that would provide an alternative to today’s suboptimal land
record management solutions, it is important to create something with the following
properties:

- Scalable and easily adoptable: It is paramount that the solution should be easily
accessible to large swathes of the population.

- Interoperable and extensible: The solution should be easy to introduce for brokers,
realtors, government functionaries, homeowners, and anybody else who may use it. The
system should also be ‘future-proof’ ie. it should be ready to evolve and add utility as
technology advances.

- Efficient: The system should be designed so that it can not only accommodate but also
help speed up the various legal and regulatory checks that need to occur in today’s real
estate workflows.

- Secure: As far as possible, the system should maintain confidentiality and privacy while
also giving guarantees of non-repudiation to transactions.

The cornerstone of such a system would be a strong identity solution that marries real
world identities with cryptographic keypairs allowing for efficient exchange of encrypted
and signed messages. In order to complement this identity solution, a file system would be
required in which each user could maintain electronic copies of the digital property deeds
relevant to them.

Given these requirements, it would be logical and indeed preferable to architect a potential
solution using Aadhar and Digilocker for identity and file storage respectively; nonetheless,
for the purposes of this report, we consider a solution using a generic ID system and
generic file system.


Network configuration and prerequisites
A design for a blockchain-secured land record system could have a network configuration
similar to the one depicted in this diagram:


4

The four components would be:

1. A user management system built with public key infrastructure (PKI): PKI is necessary to
enable encryption and digital signing of sensitive data. The user management solution
should have sound key management and password/privatekey failover and recovery
protocols; the solution should also ideally map well to real world identities. The registry
mapping cryptographic keypairs to real identities should be managed securely by the
government; the functioning and architecture of this system is out of the scope of this
document, but the UIDAI system can be taken as a reference.

2. A secure file system to store documents: A secure file system is required to be
associated with each user account so that land records and other such documents have
a place they can be stored and interacted with. This file system should have an interface
that can be used to buy, sell, convert, rent, lease or perform other actions on property.

3. A public blockchain network: A public blockchain network is integral to the mission of
ensuring secure registration of land records. There needs to be one source of truth
which records in detail all of the documents being generated and exchanged throughout
the system. This blockchain should be made open to the public to promote trust in the
system and increase network resilience/security - this is possible as there is no sensitive
or large data being shared on the blockchain. In our proposal, we refer to this
blockchain as LandChain.

4. A blockchain explorer: A blockchain explorer interface would have to be developed
which could be used to access the data stored in Landchain. This explorer should allow
lookups by transactions, public keys, property IDs, and more.


For each of the components, here are the prerequisites that would be required:

1. ID system for users: A central ID issuing authority would be needed to store all of the
mappings of public keys to real world identities. This database should be secure to
protect privacy.

2. ID system for properties: Similar to the ID authority for users, there should be a
government body responsible for creating unique identities for properties.

3. File system: The interface governing the ID system and attached file system should be
lightweight, mobile-friendly, and extensible for third-party providers (such as conversion
APIs or data forwarding schemes). The file system should also have the capacity to
stream data.

4. Landchain: The entire Landchain network can be run on a handful of commodity
hardware machines with low computational intensity. The chain should come with a
block explorer interface that can be used to audit and traverse the transactions.
Furthermore, the chain would have to be able to converse with the ID/file system
interface.


5

Process flows and walkthroughs
In the proposed Landchain system, we focus on two main use cases:

1. Property onboarding: This is the process that occurs when a property is first uploaded
to Landchain and a unique digital ID is issued for the same.

2. Property interaction (eg. sale/purchase, lease, conversion): This is the process by which
landowners can lease, sell, convert, or otherwise utilize their property as they see fit.

The process flows for the operations are shown below:

Property onboarding: government


The onboarding of land records into the Landchain system can be done by the government
or by the landowner. The steps for the generation of a digital land record by the government
are as follows:

1. The government agency in charge of the physical/electronic land records uploads them
to a batch processing program

2. The batch processing program extracts the relevant information about the property eg.
location, area, category (residential, agricultural, so on), If the land record is electronic to
begin with, the task is easier. If the land record is a physical paper document, Optical
Character Recognition tools can be used to extract the data in a computer-friendly
format.

3. The land record is sent to an Elemential broking API. Before the API does anything, the
unique ID and public key of the landowner is fetched from the UID database. This
should be possible because the original land record will contain identifying information
about the landowner. It makes no difference whether the landowner is an individual or a
company or some other kind of legal entity.


6

4. The broking API takes the land record and hashes it to create a digital snapshot of the
record than can be used to detect any tampering with the contents of the record. The
same can be done to the other documents relevant to the land record such as title
provenance, bank receipts, etc. The broking API then encrypts the land record using a
unique and randomly generated session key. The same session key used for encryption
is further encrypted with the public key of the landowner. The encrypted land record is
sent for secure storage in the file system of the landowner.

5. The landowner can access the encrypted session key and decrypt it using his private
key. The landowner can then use the newly decrypted session key to decrypt the actual
land record and view it in his secure file system. The land record now persists in an
encrypted format with both the landowner and the relevant government authorities. The
landowner can share this land record with financiers or others in order to prove his land
claim. It should be noted that before the user can verify the hash of the land record and
decrypt the session key, he must wait for the hash and encrypted session key to be put
on the Landchain. This should take place at the same time as the landowner receiving
the land record in his file system.

6. The Elemential broking API publishes a transaction to the Landchain system. In this
transaction, a government agent uses his or his agency’s private key to generate a
‘create land record’ transaction. As part of this transaction, a unique property ID will be
created for the property after performing a de-dupe with the UID property database. The
blockchain transaction will look something like this:



{




tx type: generate-land-record-govt




property ID: 1234

property owner pub key: abcd

property type: residential apartment

property square footage: 450




location: mumbai

public key of issuing/jurisdictional authority: mumbai municipal corp pub key




digital land record hash: xy1211




encrypted session key: 12124fsdf

timestamp: 4:23pm, June 12th, 2017

tx id: 121324






}


Any other details can also be included in this transaction, for example, sale price or type of
crop grown (if it is agricultural land). The transaction also contains a digital signature from

7

the issuing authority. It should be noted that although this transaction and land record will
be publicly visible on Landchain, no private or sensitive information is transmitted here.

7. Once this transaction is registered on Landchain, the landowner can submit his own
transaction and signature which basically verifies and approves the information
uploaded by the government. The landowner can also reject the proposed land record.

8. Once the landowner verifies the proposed land record, it is considered to be verified and
everyone can see that both the landowner and the government have agreed to create an
immutable digital land record. The criteria for what constitutes a verified, stateguaranteed digital land title can be easily customized.

9. Observer nodes connected to Landchain can independently validate all activity on the
chain. This includes verifying that the signatures of the various entities match up and
that no entity is performing an action it is not authorized to do. The public will also be
able to detect dishonest behavior by any agent. For example. changing the square
footage of an old land record will change the hash of the entire blockchain for the
dishonest party, making it impossible for their chain to match up with that of an honest
observer.

Property on boarding: landowner

The method for on boarding a land record by a landowner would be very similar to the
process described above. The process flow would look like:

1. The landowner scans and submits all his relevant documents into his secure file system.

2. Through the file system, they can be sent to the government for notarization and
confirmation on the Landchain system.


8

3. There are some data-capture forms which the user fills out to capture data from the
documents. This can be done manually or through OCR.

4. From here, the documents are passed to an Elemential broking API. The broking API
hashes the documents, encrypts them with a unique random session key, and then
encrypts the session key with the public key of the relevant government authority.

5. The Elemential broking API publishes a transaction onto Landchain. This transaction
signals a user’s attempt to verify his property on the blockchain. It contains information
about the user’s public key (his identity), the relevant government authority’s public key,
a unique property ID (this can be generated and de-duped against the property UID DB
by the API), and various details about the property itself. The transaction will also
contain a hash of the various documents involved as well as the encrypted session key
required to decrypt the original documents.

6. Simultaneously, the Elemential API will pass the encrypted documents to the file system
of the government agency responsible for verifying the land record.

7. The government agency’s file system can decrypt the documents and check their
hashes versus the hashes published to Landchain. The government agents therefore
can verify and validate the truth of the user’s submitted documents.

8. If satisfied with the documents and details put on Landchain, the government agent can
sign and verify the land deed on the blockchain.

9. Once receiving all required signoffs from the landowner/government/any other relevant
parties, the document is considered verified on the chain.

These two methods can be used to add land records to the new blockchain system.
Although these process may seem complicated, they could be made very intuitive and easy
to use for both government agents and everyday citizens.

Some of the inspirations behind this proposal include Aadhaar and the 2016 Rajasthan
Urban Land (Certification of Titles) Bill. Both these projects achieved rapid deployment and
scale and were successful in digitizing identity and land records.


Property interaction:
The next part of this proposal outlines how properties can be utilized and interacted with
once they have been onboarded into the Landchain system. This is where the benefit of a
decentralized and extensible system such as Landchain will really come to the fore.

Although there are numerous different kinds of ways landowners can interact with their
land, we will use the case of a land sale as an illustration of this system. The process flow
of such a transaction could look like this:




9


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