How does Blockchain solve that problem?
It's the same issue with using it for supply chain verification, it's dependent upon the point of initial data entry. The Central American farmer enters the tomatoes that he just received via container ship from China into the Blockchain application as "organically grown domestic produce" and from that point forward consumers can rest assured about the tomatoes' authenticity and provenance. Or not.
And this immutability can arguably be a detriment. Laws and rules are messy and can be exploited, not having any recourse if you get scammed is not necessarily a huge pro.
The whole idea that you could import all the rules, laws and regulations of the real world into a computer program without any bug or unforeseen issue is probably one of the most ridiculous aspect of that whole blockchain industry. Especially since we already have a fairly consequential list of "smart contracts" that have been exploited in the wild despite being fairly basic compared to IRL regulations.
"Oh you lost your house because somebody found a weird edge case between two smart contracts that let them buy it for $1? Ah man, that sucks, but then THE CODE IS LAW so... Tough luck. Maybe try buying DOGE coins? I hear it's gonna moon soon. They used rocket emojis, so you know it's serious."
Yes, many times things like T+2 settlements on trades or taking three days for a transfer to fully clear are a feature, not a bug.
You start with Bitcoin being like cash, where once it's gone it's gone, unless a court can find the person and get it back. Then you don't want grandma to get scammed, so you build bank-like entities on top of the blockchain who re-create the three day window for transfers. In theory you could have different entities that have different settlement times as a tradeoff, but the modern system could do that now. The reason they don't is you need both parties to have the same rules or else your bank will get bogged down trying to figure out the rules of every other bank. Maybe you add an instant, non-revocable transfer like a SWIFT equivalent to go along with your 3-day ACH equivalent and, congrats, you've recreated the modern banking system.
But it would work for securities that have no distinguishable attributes from one another, especially if the extant problem with trading those securities is market access.
It enforces you to input it properly, and not do half assed job due to immutability, because whatever you input in there will stay there, attached with credentials/metadata of whoever entered it.
Currently the main problem is that docs are in sorry state, it was a rush job - and that state is very profitable for some people making dubious claims to old property.
It would be easy to notice fraud, and all real estate deals need to go through proper notary anyways - would they risk their license if their failures would be visible - for ever?
Mind you I'm not trying to propose a global solution, I'm proposing blockchain use for government entities and entities that work closely with them.
It is just that governments aren't centralized on modern world, and you can leverage decentralized nature of blockchain to have a common dataset and standard available to all of those entities.
Plus there are lots of situations in real estate law (like ground rent where the freeholder is not identifiable) which don't fit into cute little data structures. This isn't a problem with documentation being a rush job, it's a problem with some of the records of ownership being hundreds of years old. Seeing as how I would have to hire a special archivist just to access data on an 8" floppy disk, I'm not confident that the blockchain is a long-term (i.e. centuries) solution to any of these problems.
This is an unrealistic level of infallibility to ask of people. Like taking the backspace key off a keyboard to enforce people not making typos.
I don't know if you are American or familiar with how real estate works here. It is decentralized in a way that most countries are not, and there is insurance that people buy against mistakes and problems with transferring property. In a way, you could argue that a single blockchain to track real property would be more centralized than the current system.
"the vast majority of U.S. states have opted for a system of document recording in which no governmental official makes any determination of who owns the title or whether the instruments transferring it are valid"
https://en.wikipedia.org/wiki/Title_insurance
"A recording system combined with title insurance decentralizes records, creating redundancy. For example, when many records were destroyed in San Francisco's 1906 earthquake, out-of-town title companies maintained records that allowed landowners to prove ownership of their property."
There is a central record for each separate local government(located at the regional judicial office), with copies being sent to up the chain.
But the thing is - over here whatever is in that local deed book is the current legal state of the property.
Licensed notary is obliged by law to check the current legal state of the property, verify identity of the ones making the change, and do the change itself - but due to sorry state of the books first part isn't always reliable.
I am also not proposing a solution for USA problems, but for my country.
People say a blockchain is decentralized, but maybe it's more accurate to say it's a centralized system without anyone being in control. Which might in fact not be preferred to an actual decentralized system.
Because in most cases, speaking from experience, after model change they will be using a new model without doing proper conversion of old data. This happened to cadastral data over here - new schema required some fields explicitly, while old data did not have them digitized, and country-wide system was made with such assumptions. It does not work to this day properly.
Archive the old chain, deploy the new one with migrated latest state from the old chain transformed to new model. keep working.
Inherently, this cuts most use cases off at the knees. Some small country your route your shipment through changes requirements? Broken.
So we throw out the entire body of law around fraudulent conveyance?
People will go decentralized, then centralized, then decentralized, etc.
We built centralized government bodies for a reason.
The aspect of blockchain + bitcoin that's pretty appealing is limited supply & formulated inflation & cryptographic guarantees.
Applying this to all other domains is stretching it a bit.
Whatever gets there, input by trusted and certified notary, IS the current legal standard of law. No exceptions.
If legal proceeding happens that wants to restore ownership, a new state is written into that book - it does not return to the previous state.
if fraud happens you can clearly see who, when did it, and can do another change restoring it to proper current state.
While also recording who fixed that mistake.
Pet peeve: posts in a global forum that mention "here". Which one did you mean?
We, thankfully, do not operate under Common Law.
Real estate broker and former software developer here... I recall having this conversation with an investor type about three years ago. We could find no scenario where Blockchain was a meaningful improvement over a generic database. Same goes for every asset management scenario I've discussed with similar people over the years. This is not to say there aren't tons of opportunities to fix many of these real-world problems, just that Blockchain doesn't appear to add anything but does add to the complexity of the solution.
Apparently there has already been 51% attacks: https://btcmanager.com/privacy-coin-firo-51-attack/
You can keep compute systems down - i'm more interested in immutability and distributed nature than the trust issue of blockchain.
In the case of such attacks the victims will find themselves in a situation that can be described as "shadow ban" - their transactions are not accepted or accepted too late, etc.
Reducing stock settlement times below 2 days wouldn't impact volatility. Those are orthogonal issues. And current blockchain technology isn't scalable enough to handle even a fraction of stock transactions.
The deeds that matter are the ones stored by the people who will send around men with guns to kick you out if your name isn't on the deed that they have.
Speaking from my experience, the records are being kept horribly over here, there were many projects to cenralize it but the original data is in such sorry state that it is basically impossible. Not to mention that it is very profitable for some that it is in such sorry state.
They key idea is that you are unable to modify who owned what in the past, only change ownership in the current time, and the records, as per current system, are spread all over the local government entities.
Same thing for financial ledgers - immutable record of transactions to which only banks can write to.
I think that stocks are too volatile, but it is a such shock to me that you can only find out who actually owns a specific stock at T-2 ..
In both cases there is no competition for who solves the next block faster, so costs of computation costs can be kept low. I'm more attached to immutability of such databases, than distributed trust, but one cannot exist without other in blockchain.