The Choice of Titling System in Land and the Blockchain
Résumé
Should the advent of the blockchain lead to the reorganization or even the replacement of
traditional land title registration systems? In addressing this issue we first generalize the model
developed by Arrunada and Garoupa (2005) to study optimal land titling systems. Instead of
considering only recording and registration alone, we examine an a priori infinite set of systems,
each characterized by its quality (the probability that there is no forfeiture for a given plot of
land) and its unit transaction cost. In this respect, the blockchain is viewed as a cost-efficient
mechanism, albeit one potentially jeopardized by hacking. We find that, despite the introduction
of the blockchain, under some reasonable assumptions it is still socially optimal to maintain
traditional public registration. In that case, the optimal quality of protection provided by
traditional registration must be either sufficiently high (and higher than that of the blockchain),
or low enough (and lower than that of the blockchain). Yet under another set of assumptions,
it is optimal to rely on the blockchain alone and to abandon traditional registration.
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