Blockchain: Hernando de Soto and the case of Honduras

According to the World Bank, about 66% of the population in Honduras live in poverty and, in rural areas, approximately one out 5 Hondurans live in extreme poverty, or with less than $ 1.9 a day. They are official data of 2016.

Although the economic growth of the Central American country is expected to be 3.6% in 2018, Honduras has one of the highest levels of economic inequality in Latin America.

The economist Hernando de Soto refers to the registration of property titles as nonmarketed transactions. The costs of these transactions are uncontrolled in poor economies, in which governments and bureaucrats are well known to behave without integrity. This is, for example, the case of Honduras.

According to de Soto, “poor countries are by nature very corrupt”. In these kind of jurisdictions, where trust in the system that controls property rights is weak, blockchain technology could help the most disadvantaged.

Hernando de Soto together with Patrick Byrne, founder and CEO of overstock.com, have partnered with the aim of getting property rights and people’s claims publicly registered and globally verified. This could allow poor people to securely unlock the dead capital of the value of their lands. It would also help to placate conflicts, by clearly establishing who claims what property. And, of course, it would help to empower local ownership of the land.

De Soto Inc., society formed by the two men, aims to use blockchain technology to create a global record of land ownership. It is hoped that, in this way, the differences between the vision of governments and the reality of property rights will come to light.

In the words of the noted economist: “What we’re doing is providing all sides information as to how actually the informal economy holds its assets, on the basis of the ledgers that we are going to obtain from them.”

Blockchain is an open ledger, which could reside in the computers of Honduran officials and also on mobile phones of citizens who want to maintain a copy. It is also a distributed ledger, meaning that none of the parties owns it.

This initiative, which tries to create the world’s first “Global Property Rights  Book”, will undoubtedly surprise us for its effectiveness when it is carried out successfully. The so-called developing countries will be able to strengthen their documentation systems and one more step to return people to power over their assets will have been taken.

Nuria de las Heras

Nuria de las Heras

Databases & Blockchain Specialist Living the change of economic, social and personal paradigm.